The share of developer Country Garden, one of China’s largest real estate groups, lost more than 15% on the stock market on Monday, causing concern in the markets.
The share of developer Country Garden, one of China’s largest real estate groups, lost more than 15% on the stock market on Monday, causing concern in the markets.
The Hang Seng index of the Hong Kong stock market closed down 1.58%, the Shanghai Composite Index lost 0.3% and in Tokyo the Nikkei 225 fell 1.27%.
Country Garden’s situation is a direct consequence of an unprecedented crisis in the real estate sector , an area that, along with construction, has long accounted for a quarter of China’s GDP.
Country Garden is a private group, present mainly in secondary cities and employing tens of thousands of workers.
The group is listed by Forbes as one of the 500 largest companies in the world and its president, Yang Huiyan, was until recently the richest woman in Asia.
Country Garden, which boasted of financial strength, was unable to pay off two loan interest repayments last week.
The group has a 30-day grace period and could go into receivership in September if it fails to pay.
The company unexpectedly announced this weekend that it was suspending the listings of a dozen bonds starting this Monday.
This decision generated concern in the markets.
The group estimated its debt at around 1.15 trillion yuan (about 159 billion dollars) at the end of 2022. For the Bloomberg agency, the figure is about 1.4 trillion yuan (193 billion dollars).
Given this unfavorable context, the Country Garden share fell 16.3% on Monday at half-time on the Hong Kong Stock Exchange.
The head of Country Garden admitted on Friday that her company was facing, due to the current situation, “the worst difficulties” since its creation.
Like Evergrande , its rival and also multi-billion in debt, if Country Garden goes under, the repercussions on China’s financial and economic system would be catastrophic.
