New turmoil among Chinese real estate developers moves towards end of housing crisis as Evergrande reviews debt restructuring plan, China Oceanwide faces liquidation and Country Garden seeks to avoid possible default It is jeopardizing President Xi Jinping’s efforts. The news has fueled investor confusion over whether authorities have a unified plan to stabilize the market.
Bloomberg Intelligence’s index of China development stocks fell 1.2% on Tuesday, a day after posting its biggest decline this year as the Evergrande crisis entered a new phase. Shares in China Evergrande Group fell for a second consecutive session on Tuesday, dropping as much as 8% after a division of the troubled real estate developer defaulted on domestic bond repayments.
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Evergrande’s main domestic unit, Evergrande Real Estate Group, said in a Shenzhen Stock Exchange filing late Monday that it would pay principal and interest on a 4 billion yuan ($547 million) bond due by Sept. 25. announced that it had not been paid.
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Hengda said it will actively negotiate with bondholders for a resolution as soon as possible, striving to resolve debt risks and protect the rights and interests of creditors.
Also read: Chinese authorities arrest Evergrande employees amid real estate crisis
Evergrande is seeking creditor approval for a proposal to restructure $31.7 billion worth of offshore debt, including bonds, collateral and repurchase obligations.
China’s housing crisis
China’s home prices fell at an even faster pace in August, underscoring why policymakers stepped up their response to the economic slowdown at the end of the month. New housing prices in 70 cities, excluding government-subsidized housing, fell by 0.29% last month, down from a 0.23% decline in July.
At the end of August, China announced new reductions in down payment requirements for homebuyers and allowed lenders to lower existing mortgage rates to encourage home purchases.
Home sales by value rose 2.9% in August from July and hovered around the lowest monthly level in nearly six years, according to Bloomberg calculations based on separate official data. Real estate development investment, which contributed about 11% of economic output last year, remained largely unchanged from July and neared its lowest level this year.
Li Daowei, a former People’s Bank of China policy committee member, said recovery could take up to a year and the Chinese government should do more to encourage lending to cash-strapped developers.
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