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The Chinese market fell on the first day of trading this week after the holidays. This is due to growing concerns in the global market about the possibility of default international bond repayments by real estate developer Evergrande.
But the losses weren’t fearfully large after a real estate company with total debt of over $ 300 billion said it was in time for interest payments on RMB-denominated land bonds.
The news pushed up Chinese stock futures shortly before the opening bell, with the Benchmark CSI 300 Index recovering from an initial fall of about 2% in the morning trading and falling about 1.3%. The CSI 300 Real Estate Index rose 5%.
Evergrande said it will pay RMB232 million ($ 35.8 million) as interest on onshore bonds maturing in 2025. next year. The bond was trading at around 26 cents in dollars on Wednesday, reflecting imminent default expectations.
Concerns about companies defaulting offshore bonds sparked more widely World market turmoil This week, Monday’s Wall Street is suffering from the worst trading day since May.
Equities rose elsewhere in Asia on Wednesday, hoping Evergrande would reach an arrangement similar to that of international bondholders.
S & P 500 futures fluctuated from loss to profit after the announcement of onshore fixed income trading. On the other hand, Tokyo’s benchmark Tokyo Stock Price Index, which traders called a wave of “cautious bailouts,” fell 0.6% from a sharp fall.
Analysts attributed the limited decline in Chinese equities to land investors who have had more time to ease the last-minute reassurance and digest trends around Evergrande. Default concerns..
Bruce Pan, Head of Research for Investment Bank China Renaissance, said:He added that there were many in Beijing Worry more about land defaults You can also force issuers and domestic bondholders to negotiate an agreement.
“The government has a greater say in the development of land bonds — they can streamline arrangements. [with bondholders] It’s much easier to make payments than offshore bonds, “Pang said.
Evergrande is likely to miss Thursday’s offshore bond due dates, according to traders, but could try to avoid formal defaults with offshore bondholders during the 30-day grace period after the due date. There is sex.
“They will probably negotiate,” said the developer’s Chinese debt investor, adding Evergrande, “still trying a soft landing but can negotiate.” .. .. [the] Just like onshore coupons. “
Despite the attention of China, Tokyo traders continue to be uncertain about the fate of the Evergrande Group, leaving the fate of offshore bond coupon payments unclear, while stocks go further. He said it was unlikely to rise.
The Hong Kong market, which fell to 0.5% after reducing losses after Evergrande’s share price fell by as much as 7% on Tuesday, was closed due to a holiday.
Additional report by Leo Lewis of Tokyo
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Chinese stocks fall in response to global turmoil over the Evergrande Group
Source link Chinese stocks fall in response to global turmoil over the Evergrande Group