Sunac China falls by record as trade resumes after yearlong halt
SUNAC China Holdings plunged by a record on Thursday (Apr 13) as the embattled developer resumed stock trading following a yearlong suspension, even as it has taken steps to resolve its debt woes.
The stock dropped as much as 59 per cent in Hong Kong in its first trading since Apr 1 last year. The resumption came after Sunac said it has met stock exchange requirements such as releasing overdue financial results.
The sell-off is a reminder of the entrenched pessimism towards some of China’s weakest developers as concerns linger about their prospects amid a nascent but patchy housing recovery. Echoing the fragile mood in the stock market, Sunac’s dollar bonds mostly remain at deeply distressed levels, a sign of investor scepticism about the defaulter’s restructuring plan.
“The trading resumption could aid its restructuring, which includes a debt-to-equity swap option,” Bloomberg Intelligence analyst Kristy Hung wrote in a note. Sunac could “regain access to equity raising” given the pressure to shore up its balance sheet.
Sunac, once among China’s biggest developers, suffered its first public dollar bond payment failure last year amid a record wave of delinquencies in a sector hit by cash shortages and slumping sales. The firm said in late March it has reached an agreement with a group of key bondholders as it laid out details of a debt-restructuring plan.
The developer said in a Wednesday stock exchange filing that it is in the process of implementing the restructuring plan and that it has “a sufficient level of operations and assets of sufficient value to support its operations”.
A Bloomberg Intelligence gauge of Chinese property stocks fell 23 per cent during Sunac’s trading halt. The sector’s broad-based weakness has persisted even after Beijing made sweeping efforts late last year to ease the unprecedented housing crisis, with steps including financing support for builders and stimulating home demand. BLOOMBERG
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