The debt crisis of one of China’s largest real estate developers is intensifying, and investors are increasingly worried about the risks posed by the world’s second largest economy.
The troubled developer Evergrande announced on Tuesday that if it fails to raise enough funds to pay interest, it will face a debt default risk of up to $300 billion. CNN report Evergrande has stopped some property work, but this may cause damage to the Chinese real estate industry, and potential defaults will sweep the banking system.
On Tuesday, Evergrande issued a grim statement, but its executives have taken action to reassure doubtful investors that they Take measures To avoid the worst results.The developer later stated on Wednesday that it was exploring Optional sale Electric vehicles and property service units owned at discounted prices to generate new cash flow. Bloomberg Information Analysts said the asset sell-off may alleviate Evergrande’s liquidity problems, but it alone is not enough to improve earnings or profit margin prospects.
At the same time, its executives took iconic measures to restore investor confidence.Evergrande CEO Xu Jiayan shared postal On WeChat, he and eight executives signed a letter of guarantee for the delivery of the project to the customer. The company said in the title of the post that it is determined to “ensure the quality of our construction” and to ensure that “a large number of high-quality projects” are delivered “in any way possible”.
Evergrande’s worrying debt is accompanied by a push by Chinese regulators to target some of its most valuable companies.This has always been aimed at the Chinese President Xi Jinping Promoted as an agenda to reduce the power of concentrated wealth, which is exacerbating inequality in the most populous country on earth.depending on Half a trillion dollars The new rules cancelled capitalization for a while, especially after the new rules hit China’s proud technology companies such as Tencent and ride-hailing company Didi.
In addition to the new regulations, China’s economy has been steadily slowing due to the COVID-19 pandemic. The closure of factories and shipyards has led to global supply shortages and an increase in manufacturing weakness.Wednesday, the Caixin The manufacturing index fell from 50.3 to 49.2, the first contraction since April 2020.
Whether the Chinese central government will take action to rescue Evergrande from the disaster is still an open question.Quoted by an analyst from Capital Investment CNN Writes that Beijing may be reluctant to take this action because it prefers to see what it considers to be reckless risk-taking or rampant speculation from the private sector is discouraged. At the same time, with the huge scale of Evergrande, analysts predict that if the developer does default, the regulator will allow it to reorganize in an orderly manner.
A fund manager is working with South China Morning Post A different opinion was taken. De Ming of Shanghai Huichen Asset Management Co., Ltd. explained that the Chinese government is more willing to see the orders already placed by Evergrande customers be fulfilled, so as not to damage a regime that advocates social harmony.
“Failure to deliver will cause an uproar in public opinion and affect social stability,” Dai said. “Hengda must now give priority to delivery.”
