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China Real Estate Shares Pummeled In Hong Kong; Alibaba Falls Again, Coal Gains

Shares in several of China’s largest real estate developers were pummeled in Hong Kong on Tuesday amid nervousness about financial transparency and defaults in the industry after Shenzhen-headquartered Fantasia Holdings said yesterday it wasn’t able to make payment on $206 million in debt. Fantasia’s woes only added to investor concern about the future of debt-laden China Evergrande Group which has also been unable to make some payments.

China Evergrande Group, the world’s most indebted real estate developer, and Evergrande Property Services, its property management arm, halted trading their shares at the Hong Kong Stock Exchange on Monday.  China Evergrande said the suspension was connected to a possible major transaction, and Evergrande Property said it was tied to a possible general offer for its shares. Reports said Chinese developer Hopson Development, whose shares were also halted, would buy a 51% stake in Evergrande Property, according to Reuters. Hopson is controlled by billionaire Chu Mang Yee. None of the three companies announced new details today. Fantasia’s shares have been suspended since Sept. 29.

Among today’s biggest real estate losers were Guangzhou R&F, which dropped 9.5% to HK$5.22, Shimao Group fell 8.2% to HK$12.68, Sunac China lost 10.1% to HK$15.02, and Kaisa Group plunged 10.5% to HK$1.96.

In spite of the losses among China real estate developers, Hong Kong’s benchmark Hang Seng index rebounded from yesterday’s near 12-month low, gaining 0.3% to 24,104.15.

Energy stocks gained on higher global prices and shortages.  China is the world’s largest coal producer, and, among its biggest coal suppliers, China Coal Energy rose by 5.4% and China Shenhua Energy gained 2%. In the oil industry, Sinopec closed up 2.3%, and Cnooc rose by 2.5%.

Alibaba Group bounced back from the day’s lows but ended down 1.2%, amid continuing worries about potential fallout from higher interest rates globally and Beijing government policy toward heavyweights in China’s technology sector. Alibaba’s closing price of HK$135.30 was its lowest close since the company’s secondary listing at HK$176 a share at the Hong Kong Stock Exchange in 2019.  Among other China technology leaders, Tencent lost 1.5% and Meituan fell 1.3%. 

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Mainland China’s bourses are closed for the National Day holiday until Friday.

See related posts:

Fantasia Didn’t Pay $206 Mln Debt Due On Oct. 4, Adding To China Real Estate Woes

Investors May Be Further “Left Smarting” After Evergrande As China Retools Economic Policies

@rflannerychina

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