China Evergrande Group, the world’s most indebted homeowners, resumed fraudulent Monday night as the 30-day grace period ended at $ 82.5m to repay a debt owed in November.
Earlier on Monday, shares of the company dropped from the first sale since it was revealed Friday that it would be difficult to meet the $ 260m guarantee and that its seat had been invited by regulators.
Hong Kong’s Evergrande stock price fell 19.6 percent from Friday to HK $ 1.81 ($ 0.23), the lowest.
Chinese authorities have tried to convince domestic and foreign investors that they could have the Evergrande crisis. The central bank said the markets had closed to release Rmb1.2tn ($ 188bn) from banks by reducing the share of funds that financial institutions are required to keep by 50 points, in addition to strengthening the economy.
Although the People’s Bank of China has said it will not “flood” the economy and incentives, the Chinese Communist Party politburo has promised to keep the “reformed” economic system in the coming year, according to state media.
Chaoping Zhu, an expert at JPMorgan Asset Management, said the cut reflects the government’s desire to “seek a balance between short-term stability and long-term change”.
Evergrande said on Friday evening he received a request for a $ 260m guarantee, but did not elaborate. It is unknown at this time what he will do after leaving the post.
In its annual report released in August, Evergrande said it had issued financial guarantees on behalf of real estate buyers and businesses worth Rmb557bn ($ 87.4bn).
Evergrande, whose debt problem began to fade September, has a minimum of $ 610m rebate by the end of February. The two largest payments, $ 255m and $ 235m, are set to take place on December 28 and Jan 24 respectively. The 30-day grace period for the $ 82.5m coupon was due to end on Monday.
Evergrande did not say in a statement on Friday that the $ 260m guarantee was due, but warned that failing to meet the obligations could result in “debtors” seeking to speed up the repayment of certain loans.
In September, a Shenzhen developer was forced to reschedule refunds for retail customers who bought the company’s bulk sales products. It also provided repayment to depositors and dealers with completed flats in lieu of cash.
Evergrande later missed the debt deadline but always managed to meet his obligations before the grace period expired, avoiding debt repayment.
Following Evergrande’s remarks on Friday, China’s central bank reiterated its criticism of the company’s management, accusing it of “bad governance” and seeking “blind growth”.
In addition to summoning Evergrande chairman Hui Ka Yan on Friday, the Guangdong provincial government sent a delegation to the party’s headquarters to oversee its assets. Hui is opportunity dropped by 70 percent last year to $ 11bn.
Property prices in major Chinese cities has declined or collapsed in recent months – a welcome development for officials responsible for implementing President Xi Jinping’s new policy to reduce social inequality.
But with China’s economy estimated to account for one third of the total economy, there is growing concern that the world’s second-largest economy could grow by 5 percent next year.
Wanting for urban gardens has declined sharply in recent months, threatening a major source of funding for local governments that are also struggling to raise funds to support construction.
“A major hurricane will be the loss of property,” said Larry Hu, a Chinese economist at Macquarie. “The economic downturn poses a serious threat to China’s economy.”
The Chinese Communist Party will hold its annual budget meeting in the next few weeks. Planners are expected to approve alternatives to slow growth at the summit, but otherwise continue to follow the limit set by the police on manufacturers last year.
Additional reports of Xinning Liu in Beijing
Source link
