China property shares pummelled as Evergrande impact widens

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SHANGHAI, Oct 14 (Businesshala) – Shares of Chinese real estate firms fell on Thursday, as investors worried about a debt crisis raging through developers including China Evergrande Group (3333.HK), a day after the sector was hit with fresh water. The rating was hit with a downgrade.

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Evergrande, which has more than $300 billion in liabilities and 1,300 real estate projects in more than 280 cities, missed its third round of interest payments on its international bonds this week, and some other firms have warned they could default. Huh.

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Rising risks at sector-led ratings agency S&P Global prompt a fresh downgrade to two of the sector’s biggest firms, Greenland Holdings (600606.SS) – which has built some of the world’s tallest residential towers – and e- House (2048.HK), and warned that it could cut his rating further.

New data on Thursday showed China’s annual factory gate prices hit their fastest pace at record levels in September, adding to concerns from investors hoping for a rapid recovery policy easing in the world’s second-largest economy. growing from. material prices.

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Zhiwei Zhang, chief economist at Pinpoint Asset Management, said continued inflationary pressures would limit the scope for any monetary policy easing.

“But the most important policy in the property sector is not monetary policy, but regulation relating to leverage and bank credit supply to developers (and) home buyers,” he said.

“So I think the government still has the option of loosening those policies to help the property sector. The big question is whether they are willing to do that. So far their policy stance seems pretty firm.”

On Thursday, a sub-index tracking shares of Chinese property developers (.CSI000952) fell nearly 3% by noon, while the broader CSI300 blue-chip index (.CSI300) slipped 0.31%. Asset shares are down about 19% this year compared to the CSI300’s 5.5% drop.

Price action in the onshore bond market remained relatively low after large volatility in recent sessions. Guangzhou R&F’s 6.7% April 2022 exchange-traded bond rose 0.34% but was still trading at a discount of more than 35% from its face value.

Shanghai Shimao Co.’s 4.65% January 2022 bond was the biggest loser among Shanghai Stock Exchange-traded corporate bonds, falling 3.16% to 92.48 yuan, according to exchange data.

Markets in Hong Kong remained closed on Thursday for a public holiday.

Global concerns over the potential for the spread of credit risk from China’s property sector to the broader economy have spilled over to investment grade Chinese firms (.MERACCG) – or risk premium – that is the most solid finance, given its prevalence in greater is close. Wednesday evening two months US time.

Spreads on the equivalent high-yield or ‘junk’-rated index (.MERACYC), which tracks firms like Evergrande, bounced back on Wednesday, but remained close to all-time highs.

Reporting by Andrew Galbraith; Editing by Muralikumar Anantharaman

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