The day was even a holiday for some exchanges in Japan and mainland China, but in Hong Kong, where the Hang Seng traded, the Evergrande real estate group was an inevitable topic. Overall, the Hang Seng fell 3.5% this session.
Evergrade shares fell to 2010 lows, ending the Hong Kong session with a 10.24% drop to HK $ 2.28. The company managed to cut some of its losses in the session, as during the negotiations in Hong Kong, bonds have already fallen by 19%.
It was the group’s sixth straight downs session at a time when the real estate giant faced a crisis that brought “unprecedented difficulties.” The group was forced to publicly warn about the risk of default last month, again this month, indicating that it is under “tremendous pressure” from a lack of liquidity. The giant’s financial position worries investors, who fear that the company will not be able to raise the necessary funds to avoid a situation of default, while the company must pay $ 83.5 million in interest on the bond. next September 23rd.
Evergrande’s session results and concerns about real estate in China have spread to other companies in the real estate sector. One example is the fall in shares of the largest insurance company in the Chinese market, Ping An, which fell 8.4% on Monday. The Hang Seng Real Estate Index, which tracks the performance of real estate companies, fell nearly 7% to hit 2016 lows.
“Evergrande is just the tip of the iceberg,” Louis Tse, managing director of Wealthy Securities, quoted the Financial Times. The analyst notes that real estate companies in China are under “significant pressure.”
In addition to Evergrande, investors were alarmed by the Chinese Sinic, which operates in the real estate sector. The company stopped trading in Hong Kong after the stock fell 87%. According to Bloomberg, the company did not provide justification for the termination of trading.
