BREAKING NEWS Purdue football draws Tennessee in Music City Bowl Full Story

Evergrande's debt crisis is wreaking havoc on Hong Kong's stock market

Evergrande's debt crisis is wreaking havoc on Hong Kong's stock market

Posted: Sep 20, 2021 7:31 AM
Updated: Sep 20, 2021 7:31 AM

Evergrande's debt crisis is continuing to unsettle investors in Asia and raising concerns about whether a potential default by the troubled Chinese conglomerate could spill over to other parts of the economy.

Shares of Evergrande Group plummeted 10% in Hong Kong on Monday, hitting just 2.28 Hong Kong dollars ($0.29) per share. The stock has shed 84% so far this year, plunging below its 2009 IPO price of 3.5 Hong Kong dollars ($0.45).

The Hang Seng Index on Monday dropped 3.3%, suffering its worst decline in nearly two months, as Chinese banks, insurers and other real estate companies were slammed.

Evergrande is facing a few critical deadlines this week. It was supposed to repay interest on some bank loans on Monday, according to Bloomberg. The news outlet recently reported that Chinese authorities have told major banks that they won't receive those payments.

Evergrande did not immediately respond to a request from CNN Business for comment about those payments.

And interest payments totaling more than $100 million are due later this week on two of the company's bonds, according to data provider Refinitiv.

But it's not clear how much — if any — of those debt obligations Evergrande will be able to meet. The group is China's most indebted developer, with more than $300 billion worth of liabilities. Over the last few weeks, it's warned investors of cash flow issues, saying that it could default if it's unable to raise money quickly.

Evergrande's debt burden is so large that analysts have warned that risks could spread throughout China. The company holds about 6.5% of the total debt held by China's property sector, according to an estimate by UBS.

The Hang Seng Property Index, which tracks major developers listed in the city, sank 6.7%, hitting its lowest level since May 2016. The chill might have been exacerbated by a Reuters report late Friday afternoon, which cited anonymous sources as saying that Beijing has called on Hong Kong's powerful property tycoons to pour resources and influence into backing Beijing's interests.

Hong Kong developers New World Development and Chinese Estates Holdings, well known as Evergrande's long-time allies that often supported the company by buying its bonds or part of its stakes, fell 12.3% and 8.5%, respectively. Another Chinese property developer, Country Garden, lost more than 6%.

The sell-off spread to shares of Chinese banks and insurance companies. Ping An Insurance — the country's largest insurer and one of its biggest property investors — slid nearly 6% on Monday to its lowest level since 2017. The heavy losses came even though Ping An said Friday that the company has "zero exposure" to Evergrande, while risks to its other property investments were "controllable," according to Chinese state media.

Mainland Chinese stock and bond markets were shut Monday for a public holiday and will reopen on Wednesday.

Goldman Sachs analysts warned of "rising risks" from the Chinese property market.

"Concerns over Evergrande are rising and signs of financing difficulties spreading to other developers are emerging," they said in a research report published Sunday night. The Chinese government needs to "carefully manage" Evergrande's potential default or restructuring, while delivering a clear message to help "shore up confidence and to stop the spillover effect," they said.

Evergrande has about 200,000 employees, raked in more than $110 billion in sales last year and has more than 1,300 developments, according to the company. Its huge liabilities are widely held by financial institutions, retail investors, homebuyers and suppliers in the construction, materials and design industries.

Trouble at the heavily indebted property giant has been brewing for the past year. In August 2020, Beijing began containing the property sector's excessive borrowing in an attempt to prevent the housing market from overheating and to curb debt growth.

Evergrade's liquidity crisis has intensified in recent weeks, triggering a further plunge in the company's stocks and bonds.

Early last week, the Chinese media outlet Caixin reported that several hundred people who had invested in an Evergrande wealth management product surrounded the company's Shenzhen headquarters, demanding their money back.

They also questioned a senior Evergrande executive, who they claimed had redeemed his investment several months ago, suggesting that he had known the extent of the company's problems before telling investors.

The company on Friday warned that six of its executives could face "severe punishments" for cashing out early on the wealth management product. On Saturday, the company said it would start repaying its wealth management investors with real estate.

The-CNN-Wire
™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

West Lafayette
Cloudy
48° wxIcon
Hi: 47° Lo: 29°
Feels Like: 44°
Kokomo
Cloudy
46° wxIcon
Hi: 46° Lo: 28°
Feels Like: 39°
Rensselaer
Cloudy
41° wxIcon
Hi: 42° Lo: 32°
Feels Like: 36°
Fowler
Cloudy
48° wxIcon
Hi: 45° Lo: 30°
Feels Like: 44°
Williamsport
Cloudy
48° wxIcon
Hi: 47° Lo: 29°
Feels Like: 43°
Crawfordsville
Cloudy
48° wxIcon
Hi: 49° Lo: 30°
Feels Like: 42°
Frankfort
Cloudy
48° wxIcon
Hi: 48° Lo: 29°
Feels Like: 42°
Delphi
Cloudy
44° wxIcon
Hi: 47° Lo: 30°
Feels Like: 40°
Monticello
Cloudy
44° wxIcon
Hi: 47° Lo: 31°
Feels Like: 40°
Logansport
Cloudy
43° wxIcon
Hi: 43° Lo: 29°
Feels Like: 38°
More active weather headed our way...
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 1118335

Reported Deaths: 17712
CountyCasesDeaths
Marion1455892240
Lake724831254
Allen67063882
Hamilton51060487
St. Joseph49820649
Elkhart40268546
Vanderburgh34714497
Tippecanoe30808276
Johnson27696467
Hendricks26313385
Porter25657386
Madison21131455
Clark20238279
Vigo19059309
LaPorte17192261
Howard16770314
Delaware16761303
Monroe16628220
Kosciusko14293167
Hancock13113186
Bartholomew12983190
Warrick12210190
Wayne12090269
Floyd12011226
Grant11998245
Morgan10409192
Boone9869124
Noble9316122
Henry9177169
Marshall9152147
Dearborn8970100
Dubois8835140
Shelby8281130
Cass8167128
Lawrence8057185
DeKalb7817109
Jackson770793
Huntington7661115
Gibson7102118
Montgomery7101123
Harrison6954100
Knox6915116
Steuben669089
Whitley659660
Miami6595113
Putnam645085
Clinton627179
Wabash6221111
Jasper613192
Jefferson5856105
Ripley557294
Adams542281
Daviess5076117
Scott491580
Wells4836105
White478469
Greene4701101
Clay464662
Decatur4611110
Fayette452496
Jennings452067
LaGrange427491
Posey410044
Randolph3944107
Washington390956
Fountain375964
Fulton364874
Spencer362247
Starke355574
Owen353577
Sullivan348555
Orange331372
Jay331050
Rush309533
Carroll296239
Franklin292744
Perry290553
Vermillion283658
Tipton251167
Parke250130
Pike248644
Blackford222144
Pulaski210359
Newton182452
Brown177550
Crawford169129
Benton168417
Martin152120
Switzerland147612
Warren135816
Union122616
Ohio92413
Unassigned0595

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events