Fears of a contagion from the potential collapse of battered Chinese real-estate giant China Evergrande Group (恆大集團) yesterday sent property shares plunging in Hong Kong, with the firm expected to default on upcoming interest payments this week.
Evergrande, one of the country’s biggest developers, is on the brink of collapse as it wallows in debts of more than US$300 billion, raising concerns of a spillover into the domestic and global economy.
The crisis has triggered rare protests outside the company’s offices in several Chinese cities by investors and suppliers — some of whom say they are owed as much as US$1 million — demanding their money.
Photo: Bloomberg
Adding to the anger, it emerged at the weekend that six top executives would face “severe punishment” for redeeming financial products before telling retail investors that the firm could not pay them on time.
The firm said they must return the cash they redeemed “within a time limit,” adding that its investment arm must “strictly follow the announced repayment plan to ensure fairness and impartiality.”
The crisis sent shares in the firm diving about 17 percent yesterday, leaving it down about 90 percent from the start of the year.
Other property firms were also in the firing line, with Henderson Land Development Co (恆基地產) and New World Development Co (新世界發展) each about 12 percent lower. Sun Hung Kai Properties Ltd (新鴻基地產) shed 9 percent.
Meanwhile, insurance giant Ping An Insurance Group Co (平安保險) lost about 8 percent. China Minsheng Bank Corp (中國民生銀行), Agricultural Bank of China Ltd (中國農業銀行) and Industrial and Commercial Bank of China Ltd (中國工商銀行) all declined about 3 to 5 percent.
The dash for the exit left the Hang Seng down 3.3 percent.
A lack of comment from Beijing and the Mid-Autumn Festival holiday in China are only adding to the uncertainty, analysts said.
BOCOM International Holdings Co (交銀國際控股) analyst Philip Tse (謝騏聰) said that “there will be further downside” unless leaders give a clear signal on Evergrande or ease up on their clampdown on the real-estate sector, Tse said.
Attention is now on the company’s repayments, with interest due on bank loans yesterday and two bonds on Thursday.
However, one creditor quoted by Chinese financial outlet Caixin Global Monday said that there is a “99.99 percent” chance Evergrande would not be able to pay interest due in the third quarter.
As of end June, the property developer had total liabilities of almost 2 trillion yuan (US$309 billion) — roughly equivalent to 2 percent of China’s GDP — with an unknown amount of off-sheet debt.
Experts say the firm has more than 1 million units pre-paid by customers yet to be built, adding to the sense of dread among Chinese investors, many of them first-time buyers.
With access to lending markets now cut off and no money to complete developments and service its debts, the firm has been trying new ways to meet its responsibilities, including offering parking spaces and unfinished properties.
Still, while leaders are looking to curb excessive risk-taking, there is a general belief they will work to prevent the issue from becoming unmanageable and driving a hole through the already stuttering economy.
“The central government’s priority of social stability makes restructuring likely with haircuts for debt holders, but spillovers to other listed property developers means there will likely be a real economy impact on the real-estate sector,” National Australia Bank Ltd senior analyst Tapas Strickland said.
“To what extent Evergrande slows the growth momentum remains unclear,” Strickland added.
In Italy’s storied gold-making hubs, jewelers are reworking their designs to trim gold content as they race to blunt the effect of record prices and appeal to shoppers watching their budgets. Gold prices hit a record high on Thursday, surging near US$5,600 an ounce, more than double a year ago as geopolitical concerns and jitters over trade pushed investors toward the safe-haven asset. The rally is putting undue pressure on small artisans as they face mounting demands from customers, including international brands, to produce cheaper items, from signature pieces to wedding rings, according to interviews with four independent jewelers in Italy’s main
Japanese Prime Minister Sanae Takaichi has talked up the benefits of a weaker yen in a campaign speech, adopting a tone at odds with her finance ministry, which has refused to rule out any options to counter excessive foreign exchange volatility. Takaichi later softened her stance, saying she did not have a preference for the yen’s direction. “People say the weak yen is bad right now, but for export industries, it’s a major opportunity,” Takaichi said on Saturday at a rally for Liberal Democratic Party candidate Daishiro Yamagiwa in Kanagawa Prefecture ahead of a snap election on Sunday. “Whether it’s selling food or
CONCERNS: Tech companies investing in AI businesses that purchase their products have raised questions among investors that they are artificially propping up demand Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday said that the company would be participating in OpenAI’s latest funding round, describing it as potentially “the largest investment we’ve ever made.” “We will invest a great deal of money,” Huang told reporters while visiting Taipei. “I believe in OpenAI. The work that they do is incredible. They’re one of the most consequential companies of our time.” Huang did not say exactly how much Nvidia might contribute, but described the investment as “huge.” “Let Sam announce how much he’s going to raise — it’s for him to decide,” Huang said, referring to OpenAI
The global server market is expected to grow 12.8 percent annually this year, with artificial intelligence (AI) servers projected to account for 16.5 percent, driven by continued investment in AI infrastructure by major cloud service providers (CSPs), market researcher TrendForce Corp (集邦科技) said yesterday. Global AI server shipments this year are expected to increase 28 percent year-on-year to more than 2.7 million units, driven by sustained demand from CSPs and government sovereign cloud projects, TrendForce analyst Frank Kung (龔明德) told the Taipei Times. Demand for GPU-based AI servers, including Nvidia Corp’s GB and Vera Rubin rack systems, is expected to remain high,
RSS