Post by account_disabled on Feb 20, 2024 3:18:40 GMT -5
The floorboards are giving way under Chinese real estate companies. On Monday, share prices across the sector fell the most this year. Evergrande fell 21 percent after canceling key creditor meetings at the last minute. There is still a risk of contagion both inside and outside China. That nervousness could extend to raw materials. Iron ore prices fell more than 4 percent on Monday. This comes as seasonal demand from China has been historically strong. China buys about 70 percent of the world's seaborne iron ore. Chinese developers have stopped replenishing steel. Price volatility tells the story. The market already fears a default by Country Garden. The dollar bond of Country Garden, previously one of the safest big developers, fell below 10 cents.
China Aoyuan Group's share price fell 73 percent. A court-ordered liquidation of China Oceanwide is looming after a Bermuda court issued a liquidation order. Any property concerns have had most Job Function Email Database of their effect on developers' stocks and bonds. But there are also links with other sectors, most clearly with banks. China Oceanwide is a shareholder in China Minsheng Bank, China's largest private lender. Minsheng Banking Corp has already filed a lawsuit against Oceanwide Holdings for failing to pay its debts. Most European stock indices fell that day. Chinese junk dollar bonds, including those not related to property, have suffered significant declines, reflecting growing nervousness among investors about contagion. Previous hopes for a massive stimulus plan from Beijing have disappointed as deployments have remained incremental this year.
Beijing has repeatedly said there will be no direct bailout. Meanwhile, real estate prices have continued to fall as aggressive policy easing has done little to revive sales and projects have stalled. In the first half of August, Chinese home sales in 50 major cities fell 29.3 percent year on year, according to S&P Global Commodity Insights. For all of Beijing's reluctance to intervene, China's accelerating real estate implosion can be contained. State-owned local banks should quickly absorb failing smaller banks. But, as other markets' reaction to the bad news reveals, any shock will continue to ripple through global commodity markets and Asian high-yield bonds.
China Aoyuan Group's share price fell 73 percent. A court-ordered liquidation of China Oceanwide is looming after a Bermuda court issued a liquidation order. Any property concerns have had most Job Function Email Database of their effect on developers' stocks and bonds. But there are also links with other sectors, most clearly with banks. China Oceanwide is a shareholder in China Minsheng Bank, China's largest private lender. Minsheng Banking Corp has already filed a lawsuit against Oceanwide Holdings for failing to pay its debts. Most European stock indices fell that day. Chinese junk dollar bonds, including those not related to property, have suffered significant declines, reflecting growing nervousness among investors about contagion. Previous hopes for a massive stimulus plan from Beijing have disappointed as deployments have remained incremental this year.
Beijing has repeatedly said there will be no direct bailout. Meanwhile, real estate prices have continued to fall as aggressive policy easing has done little to revive sales and projects have stalled. In the first half of August, Chinese home sales in 50 major cities fell 29.3 percent year on year, according to S&P Global Commodity Insights. For all of Beijing's reluctance to intervene, China's accelerating real estate implosion can be contained. State-owned local banks should quickly absorb failing smaller banks. But, as other markets' reaction to the bad news reveals, any shock will continue to ripple through global commodity markets and Asian high-yield bonds.