News Update


Country Garden: Property stocks soar on debt relief

On Monday, shares of major home builders such as Country Garden and Evergrande rose in Hong Kong.

Investors also appreciated Beijing’s decision to increase its support for the struggling economy.

It is welcome news for China’s struggling real estate business.

On Monday afternoon, Country Garden’s Hong Kong-listed shares were up around 15%.

The company’s stock is still down more than 60% since the beginning of the year.

Country Garden, one of China’s largest property developers, was scheduled to make payments on Saturday for a 3.9 billion yuan (£430 million; $540 million) onshore private bond.

According to reports, the firm avoided defaulting on the debt because Chinese creditors agreed over the weekend to allow it to make the payments in instalments over the next three years.

According to Bloomberg, the business also transferred a payment on a 2.85 million Malaysian ringgit (£490,000; $613,000) denominated bond.

However, it is still required to make $22 million (£17.4 million) in debt payments on two US dollar bonds that it missed in August by Wednesday.

Country Garden did not immediately respond to a request for comment from the BBC.

In recent months, the company’s difficulties have come to light.

The company recorded a record $6.7 billion (£5.2 billion) loss for the first six months of the year last week.

Country Garden declared at the time that it was “deeply remorseful for the unsatisfactory performance.”

Beijing stepped up stimulus efforts on Friday, with key banks opening the way for further rate cuts.

Concerns are growing concerning China’s real estate industry, which accounts for almost a quarter of the world’s second largest economy.

As the economy battles to recover from the epidemic, issues ranging from home builders to companies producing the items that go into them are having a significant influence.

In 2020, new restrictions limiting the amount of money that large real estate enterprises may borrow shook China’s real estate market.

Evergrande, previously China’s top-selling developer, amassed debts of more than $300 billion as it rapidly expanded to become one of the country’s largest corporations.

Its financial woes have reverberated throughout the country’s real estate business, with a number of developers defaulting on their obligations and abandoning construction projects around the country.

Evergrande reported a 33 billion yuan loss for the first six months of the year just over a week ago.

Its shares plunged about 80% on their debut day of trade in Hong Kong in over a year and a half.

Evergrande shares have lost more than 99% of their value in the last three years as Beijing has cracked down on real estate companies.

China is also dealing with a number of difficulties, such as slowing economic development, increasing local government debt, and record-high young unemployment.


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