China property stocks slump; lose $55 billion value as debt woes escalate: Report

A Bloomberg Intelligence gauge of developer shares fell as much as 6.4% Monday, taking its loss in valuation this year to $55 billion. China Aoyuan Group Ltd slumped by a record 76%, becoming the biggest drag on the gauge.

Evergrande shares crashed 25% on Monday after it scrapped key creditor meetings at the last minute and said it must revisit its restructuring plan. 

On Sunday, Evergrande had announced that it was unable to issue new debt due to an ongoing investigation into its main domestic subsidiary Hengda Real Estate Group.

Earlier, it said that the meetings on the restructuring scheduled for Monday and Tuesday would not take place.

Evergrande had an estimated debt of $328 billion at the end of June which has contributed to the country’s deepening property market crisis. The property sector, which along with construction accounts for about a quarter of China’s gross domestic product.

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While developers are pinning their hopes on the upcoming Golden Week holiday period to revive home sales, a rapid cooling of a late-August rally in property shares shows any relief may be short lived, Bloomberg reported.

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Meanwhile, China Oceanwide Holdings Ltd. is facing a court-ordered liquidation as a Bermuda court has issued a winding-up order against the company. 

The nation’s regulator said it’s launched an inquiry into Ping An Real Estate Co. over an undisclosed overdue loan payment. Concerns also linger over a potential default by Country Garden Holdings Co, Bloomberg reported. 

Chinese property junk dollar notes, most of which are in deeply distressed levels at below 15 cents, were largely unchanged on Monday.

Ping An Real Estate suffered the most, with its 2.75% note due 2024 falling 4.6 cents to 73.8 cents, according to Bloomberg-compiled data. China’s high yield bond index, mainly composed of the country’s developers, dropped 0.25 cents last week, the first decline this month.

(With inputs from Bloomberg)

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Updated: 25 Sep 2023, 11:14 AM IST