(AF) China’s biggest housing broker is under investigation for anti-competitive practices, but KE Holdings saw its US-listed shares hold up despite a probe that follows the death of founder Zuo Hui.
KE Holdings is under investigation for suspected anti-competitive practices soon after the death of founder Zuo Hui, but its US-listed shares fell by less than 3% on Tuesday May 25.
China’s market regulator is investigating KE Holdings, the country’s largest housing broker, according to Reuters. Tencent Holdings, the biggest backer of KE Holdings, could feel the impact of any regulatory probe that undercuts the value of the broker, though the impact on KE’s share price was limited in the near-term.
The investigation is one of multiple probes into Chinese companies that match sellers and buyers, several of which have been accused by regulators of exploiting consumers.
KE Holdings, which operates housing platforms Lianjia and Beike in China, was warned last month by the State Administration for Market Regulation (SAMR) against abuses of market dominance.
SAMR has been investigating whether KE Holdings forces real estate developers to list housing information only on its platforms, including Lianjia and Beike, a tactic known as “choose one from two”, Reuters reported.
The investigation has not been publicly announced. It is not known when it will wrapped up or what it could entail for KE Holdings.
KE Holdings declined to comment. SAMR did not respond to a request for comment.
KE’s NYSE-listed shares fell in pre-market trading on Tuesday May 25, but by the US close the price was down by less than 3%, on a day when benchmark indices such as the S&P 500, the Nasdaq and the Dow eased slightly.
SAMR recently hit Alibaba Group with a record $2.8 billion fine after finding that the e-commerce giant had prevented merchants from using other online e-commerce platforms since 2015.
TENCENT IN FIRING LINE
Tencent itself is in the firing line, with SAMR preparing to levy a fine of at least $1.5 billion on the gaming and social media firm.
SAMR also announced an investigation last month into Tencent-backed food delivery company Meituan.
SAMR has stationed inspectors since late April in 17 companies that operate platforms, including KE Holdings, to enhance the efficiency of antitrust inspections, Reuters said.
KE Holdings, which also has SoftBank as a backer, launched Lianjia, formerly known as Beijing Homelink Real Estate Brokerage, 20 years ago.
It grew into one of China’s largest bricks-and-mortar estate agents and later set up Beike as a separate online housing platform matching buyers and sellers, renters and landlords, as well as providing home finance.
It listed in on the NYSE in August 2020, and after sharp gains last year the shares are down 15% so far in 2021. It currently has a market value of about $62 billion.
KE Holdings faces further uncertainty following the death last week of its 50-year-old founder and chairman, Zuo Hui. Co-founder and CEO Peng Yongdong was appointed chairman this week.
Its biggest revenue sources are existing home and new home transactions, with market shares of 26% and 35%, respectively, of gross transaction volume in 2020, according to TF Securities – a relatively high proportion in China’s fragmented housing market.
KE Holdings posted strong first quarter financial results last week, with net revenue up 191% on the year, bolstered by a robust property market in China that quickly rebounded last year from the coronavirus crisis.
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