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The Shanghai Stock Exchange suspended trading in several bonds of Chinese stockbroker Shimao, a day after the company failed to repay its debt, raising fears of a global financial collapse in companies affected by real estate deals.
The sale in three renminbi-made bonds from the real estate developer, which unlike many of its more recently disadvantaged alumni found its way to cashback, was temporarily suspended following a catastrophic collapse following Thursday’s missing reports.
The crisis in Shimao has highlighted China’s economic crisis, which has had a profound effect on industry riskier credit ratings such as Evergrande and Kaisa Group, could spread to more voting makers when it comes to a declining home sales and the loss of Investor confidence.
The country’s economy has declined sharply in recent months after construction was delayed and fears of the collapse of Evergrande, who was heavily in debt, lacked financial support. has led to serious financial ruin. Evergrande and a number of allies have already revolutionized global markets.
Chinese officials have responded by putting government statistics in a dangerous committee that overseeing the reform of Evergrande and advertising motivational measures economic support. But Shimao’s plight showed that the current situation did not solve the financial problems plaguing the region.
Shimao said in a statement on Friday that despite the financial crisis, it has not repaid government debt and is working to increase its sales of goods and services. But its construction began to take a closer look at overseas markets, where it borrowed $ 7bn, compared to $ 19bn from Evergrande.
The Shimao bond growing in July fell to 49 cents a dollar, having already sold 70 cents a dollar. In Hong Kong, Shimao shares fell 7 percent on Friday.
A Hong Kong retailer also said that the “two B-names”, meaning loans under the sales grade, are also facing challenges. “People thought Shimao should be safe already,” the man said.
The suspension came after China Credit Trust, which raised funds for the group, said in a letter to investors that one of Shimao’s units had failed to repay Rmb645m ($ 103m). On Friday, Shimao said he was discussing the payment and that the matter would not affect his other debts.
To address the concerns of the property explosion, Beijing imposed regulations last year on property developers that restricted their rental. Unlike many of his colleagues, Shimao did not breakthree red lines”, Highlighting the insecurity of secure businesses in the market.
Major developers in China are facing a slowdown in real estate sales, which are exacerbating the current financial crisis Refinancing options are already banned. Shimao, who lives in Shanghai, sold Rmb270bn in 2021, down 10 percent a year earlier. In December, its sales fell by 68 percent, according to experts in Citi.
The company began looking at the market in November for problems related to its mainland trust business, and was downgraded by international agencies even though it said in December that its operations were “normal”. Fitch said last month that the company had experienced a “decline in investor confidence”, which could affect its ability to repay.
“Some Chinese real estate developers have resumed lending, but the process may not be possible for Shimao if the Investor’s confidence is not restored,” the finance ministry said.
Additional reports of Wang Xueqiao in Shanghai, Andy Lin in Hong Kong and Sun Yu in Beijing
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