Shares of Fantasia were suspended on Tuesday, but shares of Country Garden Services were down 3.2% in Hong Kong. Country Garden Holdings declined 2.8%.
The news revived fears that the debt crisis was deepening in China’s over-expanded asset sector, which accounts for 29% of outstanding loans issued by Chinese banks in yuan in the second quarter of 2021. this is the area Important to China’s economy – real estate and related industries account for about 30% of GDP.
“NS [Chinese] The asset sector is worrying,” Larry Hu and Xinyu Ji, China economists for Macquarie Group, wrote in a research note on Tuesday.
Fantasia’s missed payments suggest Evergrande’s troubles “could dampen sentiment for homebuyers, developers and banks, prompting more developers to run into a liquidity crunch,” he said.
outlook for The Chinese property market is not encouraging. Property sales in the top 30 Chinese cities fell 31% in September from a year earlier, according to Macquarie estimates.
Evergrande’s debt crisis has rattled global investors in recent weeks, raising concerns about a potential domino effect on the broader Chinese economy and financial markets.
The company’s problems have been going on for more than a year, when Beijing began reining in the real estate sector in August 2020 to curb excessive lending to prevent the market from overheating.
Earlier this year, the Chinese government made it clear that it would prioritize “general prosperity” among its policy goals and reduce house prices, which it said would worsen income inequality and threaten economic and social stability. blamed for putting
Evergrande’s liquidity crisis has escalated in recent months. The company warned investors about its cash flow crisis in September, saying it could default if it didn’t raise money quickly. Over the past few weeks, it missed at least two bond interest payments.
“While Evergrande’s problems are unlikely to trigger a Lehman moment, they will exacerbate the ongoing asset sector slowdown,” Louis Kuijs, head of Asia economics at Oxford Economics, said in a report on Tuesday.
“Given the large overall footprint of the residential real estate sector through ‘backward linkages’ to sectors such as steel, its slowdown will have a significant impact on overall economic growth,” he said.
Credit : www.cnn.com