China property stocks head for lowest since 2009 as stress rises
CHINESE property stocks are on track for a 14-year low, as stress in the sector continues to rise amid slumping home sales and deepening debt woes for major developers.
A Bloomberg Intelligence gauge of developer shares fell as much as 1 per cent on Wednesday (Oct 18), heading for its lowest closing since 2009. Times China Holdings and China Evergrande Group led the declines.
The selling comes as Country Garden Holdings, China’s former top builder, is in the final hours to meet an interest-payment deadline and avert its first-ever US dollar bond default. The company’s payment struggles, along with growing liquidation risks at peer Evergrande, highlight the need for authorities to roll out even stronger measures to contain an unprecedented housing crisis.
“The market is turning more bearish with Country Garden’s potential dollar bond default,” said Patrick Wong, a Bloomberg Intelligence analyst. The future of the industry “really depends on any further easing measures to support the housing market”.
Country Garden, which is at the centre of China’s property crisis, must pay US$15.4 million coupon on a US dollar bond by the end of a 30-day grace period Oct 17-18 or a default can be called. The company has not clarified which day marks the official end of the grace period, given the initial missed deadline of Sep 17 fell on a Sunday.
Two holders of the US dollar note due 2025 said they had yet to receive the interest as at 12.00 pm Hong Kong time on Tuesday.
Meantime, Evergrande faces the once-unthinkable possibility of asset liquidation on Oct 30 when a key court hearing takes place. A ruling to wind up the firm would wreak havoc on the struggling real estate giant that’s trying to finalise a restructuring plan to pay back creditors. BLOOMBERG
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