News Update


Debt-ridden Country Garden China’s property giant has suffered a historic loss.

This comes as the corporation posted a record $6.7 billion (£5.2 billion) loss for the first six months of the year.

Country Garden stated that it was “deeply remorseful for the unsatisfactory performance.”

The announcement adds to fears over the world’s second largest economy’s post-pandemic recovery.

Country Garden also disclosed that company has failed to make interest payments on bonds due this month. However, it stated that the payments could still be made within a 30-day grace period.

It is also apparently seeking to postpone the repayment of another bond.

The company warned that it might default on its loans “if the group’s financial performance continues to deteriorate in the future.”

“The group may be unable to meet the financial covenants of these borrowings, which may result in default in these borrowings and cross-default in certain other borrowings,” Country Garden warned in a Hong Kong regulatory filing.

The corporation warned earlier this month that it could lose up to $7.6 billion in the first six months of the year. The record loss was at the low end of the company’s 45 billion yuan ($6.2 billion; £4.9 billion) to 55 billion yuan estimate.

On Thursday morning, Country Garden shares were up about 1% in Hong Kong.

Is the Chinese economy a ‘ticking time bomb’?
China Evergrande shares have dropped by 80% as a result of the crisis.
Problems in China’s property industry, which covers everything from home construction to enterprises producing the products that go into them, are having a significant impact because it accounts for around one-third of the GDP.

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 difficulties have reverberated throughout the country’s real estate market, with a number of other developers defaulting on their payments and abandoning incomplete construction projects around the country.

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

Its shares dropped about 80% on Monday, their first day of trade in Hong Kong in nearly 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.

Other issues confronting China include slowing economic development, increasing local government debt, and record-high youth unemployment.

Official data released on Thursday indicated that factory activity in China fell for the sixth month in a row.

In August, the Purchasing Managers’ Index was 49.7. It was higher than the previous month, but it was still lower than 50, suggesting contraction.


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