If mergers are corporate marriages, strategic stakes are the equivalent of success at the school disco. Congratulations to Greentown China, a Chinese property developer with one of the sector’s weakest balance sheets, for landing a catch as mighty as Wharf Holdings, the Hong Kong property conglomerate. Those left on the dance floor will be reviewing their prospects of getting hitched.

The additional 22 per cent stake Wharf has taken in Greentown for HK$2.6bn is worth nearly HK$1bn more thanks to Monday’s one-third bounce in the target’s shares. Wharf also holds a further HK$2.6bn of convertible bonds in Greentown. The case for Wharf’s interest in Greentown (rated triple-C by Moody’s and Standard & Poor’s) is simple: decent land bank, shame about the balance sheet. The danger for Wharf is that Greentown’s management, with nearly half of the shares, remains in charge. After all, those managers pushed leverage to the extremes, which necessitated this rescue. Net debt relative to earnings before interest, tax, depreciation and amortisation rose from 2 times in 2006, when Greentown listed, to 18 times in 2010 and a still-worrying 7 times in 2011. Greentown has promised sounder finances. Wharf’s stake is a start – but only that.

Cash-rich Hong Kong property developers such as Wharf can probably take their pick of weaker mainland Chinese peers. Greentown’s overleveraged balance sheet is far from being the only one. Local housing sales growth steadied last month but the official curbs on the sector are unlikely to ease. This will cool profits and limit developers’ efforts to reduce leverage.