Shares of Shanghai-based real estate broker Sinic Holding were shut down on Monday after losing 87 percent in Hong Kong. The company's $246 million bond with 9.5 percent interest will expire on October 18. Fitch, on the other hand, changed its outlook to negative for the company last week.
Hong Kong and China Real Estate Research Manager Philip Tse stated that the main reason for the sales was liquidity concerns.
Concerns over the health of China's real estate sector also spread to the Hong Kong market on the first trading day of the week, bringing the strongest sell-off in real estate stocks in more than a year, bringing down all shares and sub-dollar bonds from banks to Ping An Insurance Group Co. .
The Hang Seng Real Estate Index fell by 5.9 percent, its biggest drop since May 2020, while Ping An Insurance, the largest insurance company in China by market capitalization, lost 7.3 percent in the Hong Kong market. Hong Kong's benchmark index Hang Seng experienced the biggest daily loss in the last two months with 3.3 percent. On the other hand, Chinese dollar bonds, which are rated below investment grade, fell by 2 cents.
Evergrande problem continues to make its impact
An important corner will be taken this week in the debt crisis that threatens the financial system of Chinese real estate giant Evergrande. Evergrande, which has more than $300 billion in debt, has to pay interest on its two bonds on Thursday.
The value of the traded bonds and bills of the real estate giant, which has already fallen behind in bank loan repayments, is also decreasing.
A bond of Evergrande dropped as much as 30 percent of the issue price in transactions, indicating strong bankruptcy risk. Although China poured $14 billion in short-term cash into the financial system on Friday, concerns about the spread of Evergrande debt risk dominate the markets. Evergrande shares are on their way to close Monday's historic low, down 19% in Hong Kong. While the shares of Chinese real estate companies fell with Evergrande, the yield in the dollar-denominated private sector bond index below the investment grade has reached the highest level of the last 10 years with 14 percent.
Comments
No comment yet.