Chinese real estate giant Evergrande, whose stock market crash in recent days has dragged stock markets across the globe, faces with uncertainty the payment of interests amounting to 84 million dollars (about 71.6 million euros) whose maturity is next Thursday.
(Read. Keys to understanding the Evergrande crisis and its impact on the markets)
To these are added another 47.5 million dollars (40.5 million euros) to be returned before next September 29. According to the economic daily Caixin, the company owes more than 800,000 million yuan (127,500 million dollars, 105,000 million euros), to be repaid in the next twelve months, but its current liquidity amounts to 10% of that amount.
(Read: Evergrande crisis punishes world stock markets)
The same source indicated that at the end of June Evergrande had a debt of 2,000 trillion yuan (about 309,000 million dollars or 263,600 million euros), “in addition to an unknown amount of debt that is not in the accounts.”
“Many institutions believe – Caixin pointed out – that the real estate giant is on the verge of a debt restructuring or even bankruptcy.“.
Thus, “for the past two months, hundreds of people have been gathering at the Zhouye Houhai Center in (the southeast Chinese town of) Shenzhen, of which the Evergrande headquarters occupies twenty floors.”
The profile of the protesters was varied: from bricklayers employed in the company’s projects to investors, passing through suppliers. Caixin’s version coincides with the images that were spread in recent days on social networks: people with banners demanding repayments of past due loans and financial products.
“Police had to deploy with riot shields to keep the situation under control“added the source.
THE LEHMAN BROTHERS OF CHINA?
From the British bank Barclays they considered that “a possible default by Evergrande could translate into a drag on the real estate sector“although they were quick to add that”is far from being China’s ‘Lehman moment’“in reference to Lehman Brothers, the US entity whose bankruptcy led to the 2008 financial crisis.
In a report released Monday, the British bank broke down how, in light of the figures from the Chinese banking system, “It is difficult to argue that Evergrande’s loan losses pose a systemic risk to the banking sector“.
“In a borderline situation, even if capital markets were closed to all Chinese real estate companies, regulators could make banks lend to those companies, keeping them afloat and buying time to find an exit.“He picked up the document.
Likewise, from Barclays they added that the effects of the possible defaults of Evergrande would be noticeable on growth.
Gilles Moëc, chief economist at French investment firm AXA Investment Managers, opined that “correcting excesses in the real estate sector will only have systemic consequences if the Chinese government allows it.”
A SOFT SESSION
However, today was not as dramatic as the previous days on the Hong Kong stock: Evergrande shares fell 0.44% and, in the benchmark Hong Kong stock index, the Hang Seng rebounded and rose by 0.51%, with the real estate sub-index leading the gains, with 2.97%.
It is true that the day had started badly for Evergrande (which is not part of the Hang Seng) and fell sharply shortly after the opening of the session today.
Their titles were recovered until -3.51% in the midday break, to go up to the mentioned -0.44% at the end of the session.
The figures are less rosy when viewed in perspective: so far this year, the value of its shares has depreciated by 84.77%, but it will not change tomorrow, as the Hong Kong parquet will be closed due to a local holiday.
EFE
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