- Shares of Chinese Real Estate Companies Surge
- Country Garden Secures Extension on Debt Payment Deadline
- Ongoing Challenges in China’s Property Market
Shares of Chinese real estate companies have risen after developer Country Garden reportedly obtained an extension on a crucial debt payment deadline.
On Monday, shares of major home builders including Country Garden and Evergrande rose in Hong Kong.
Additionally, investors applauded Beijing’s efforts to bolster the faltering economy.
It’s a rare bit of positive news for China’s crisis-stricken real estate market.
Monday afternoon, the Hong Kong-listed shares of Country Garden were approximately 15% higher.
Since the beginning of this year, the company’s stock has dropped by more than 60%.
Saturday was the due date for Country Garden, one of China’s largest property developers, to make payments on a 3.9 billion yuan (£430 million; $540 million) onshore private bond.
According to reports, the company avoided defaulting on its debt after Chinese creditors agreed over the weekend to enable it to make payments in installments over the next three years.
According to Bloomberg, the corporation has also wired a payment on a 2.85 million Malaysian ringgit (£490,000; $613,000) denominated bond.
However, it is still scheduled to make $22m (£17.4m) in debt payments on two US dollar bonds that it neglected in August by Wednesday.
In recent months, the company’s struggles have been in the spotlight.
The company reported a record $6.7bn (£5.2bn) loss for the first half of the year last week.
Country Garden stated at the time expressing “deep regret for the subpar performance.”
Friday, Beijing increased its efforts to stimulate the economy, with major banks preparing the way for additional cuts in lending rates.
Concerns are growing about China’s property market, which accounts for roughly a quarter of the second-largest economy in the world.
As the economy struggles to recuperate from the pandemic, problems with home builders and the industries that produce their components have a significant impact.
New borrowing restrictions for large real estate enterprises upset China’s real estate market in 2020.
Evergrande, once China’s top-selling developer, amassed more than $300 billion in obligations as it aggressively expanded to become the country’s largest company.
Numerous developers have defaulted on their debts and abandoned unresolved construction projects across the nation as a result of the country’s financial difficulties.
Just over a week ago, Evergrande reported a first-half loss of 33 billion Chinese yuan.
Monday marked its maiden day of trading in Hong Kong after a year and a half. Shares dropped almost 80%.
Due to Beijing’s real estate crackdown, Evergrande shares have lost over 99 percent of their value in three years.
China faces numerous problems, including sluggish economic growth, soaring local government debt, and record-breaking youth unemployment.
