China’s real estate panic cost global losses

 

Fears of a potential collapse of Chinese real estate giant Evergrande sent panic across trading floors in Hong Kong.
The confusion caused Shanghai-based property developer to lose more than a billion dollars on Monday.

 

SHANGHAI — Sinic Holdings Group chairman Zhang Yuanlin forced his firm to halt trading in Hong Kong when he saw his net worth drop from $1.3 billion Monday morning to $250.7 million a few hours later, according to Forbes.

Featured as one of Forbes’ Billionaires this year for making his fortune in high-rise apartments, Zhang is now as vulnerable as the possible collapse of China Evergrande.

In the hours before its suspension, Sinic saw a sudden sell-off and massive increase in trading volume on its shares. According to Bloomberg, this is just weeks before it has to pay a 9.5 percent or $246 million bond due on 18 October.

Sinic is one of the many others seeing their fortunes wiped over investor fear that Evergrande, one of China’s biggest developers, will default on upcoming interest payments this week. Evergrande is sinking in debts of more than $300 billion.

Accounting for more than a quarter of China’s GDP, there are concerns the property sector’s woes could affect domestic and global economy just as well.

Already, investors and suppliers who demand their money back have formed protests outside its offices.

 

Evergrande liabilities could spark broader risks

Regulators in the sector have warned of broader risks to China’s financial system if Evergrande’s $305 billion liabilities are not stabilized.

“Investors are concerned that the Evergrande issue is going to represent a domino,” said Jack Ablin, chief investment officer at Cresset Capital Management. “Investors are tending to sell first and look into it to later.”

Markets across the globe from the Dow Jones to the S&P 500, the Nasdaq Composite, and the pan-European STOXX 600 index have been affected, including mining stocks. Highly sensitive sectors, meanwhile, like financials and energy, are already hit hard.

Monday’s selloff has seen $2.2 trillion in cumulative value wiped off market capitalization of world equities from $97 trillion on 06 September, according to Refinitiv data.

Meanwhile, investors are on the lookout for when the U.S. Federal Reserve will pull back on its bond purchases.

They are also keeping their eyes on other central bank meetings from Brazil, Britain, Hungary, Indonesia, Japan, Norway, the Philippines, South Africa, Sweden, Switzerland, Taiwan, and Turkey.

The dollar index rose 0.061 percent with the euro unchanged at $1.1725.The offshore Chinese yuan weakened to its lowest level against the U.S. dollar in nearly a month. (RA/Headline PH)

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