(Bloomberg) — Chinese property developer stocks rebounded on Tuesday after the previous day’s declines, with Shimao Group Holdings Ltd. poised for its biggest gain in about two months.
Shares slipped Monday after China Evergrande Group halted trading, with the company saying that a demolition order it had received regarding a development in Hainan province would affect 39 buildings.
Tuesday’s equity market gains contrasted with dollar bond declines, according to credit traders. That comes after a report that the 100 biggest companies in China’s debt-ridden property industry suffered a drop in sales last year as they face mounting bills to pay in January and shrinking options to raise necessary funds.
Key Developments:
- Evergrande Hainan Order Suggests Fire Sale Difficulties: React
- Top China Developers Suffered Sales Drop Last Year, Report Says
- Greentown China to Redeem Two Perpetual Securities Callable 2022
- Hard Landing in Property Market Would Crater China’s Economy
- China May Try to Fill Investment Hole Left by Real Estate Sector
- China Property Bonds Under Technical Pressure in January, April
- China’s Home-Market Slump May Prompt Developers to Raise Equity
- China Developer Shares Slump as Evergrande Halt Sparks Concerns
China High-Yield Dollar Bonds Fall 1-2 Cents; Developers Lead (10:14 a.m. HK)
China junk-rated dollar bonds declined about 1-2 cents on the dollar Tuesday morning, according to credit traders, led by weakness in developers such as Sunac China Holdings Ltd. and KWG Group Holdings Ltd.
As bonds fell, developer shares rebounded. A Bloomberg index rose 3.1%, with Guangzhou R&F Properties Co. rising as much as 14% before paring. Shimao added as much as 13%.
Evergrande Hainan Order Suggests Fire Sale Difficulties (9:16 a.m. HK)
Hainan’s order for Evergrande to demolish some buildings could make it harder for the developer to sell projects in its land bank to raise funds, according to Bloomberg Intelligence analyst Kristy Hung.
Evergrande obtained significant projects without public tenders from local governments, with undisclosed terms which could put off potential acquirers. Evergrande said Jan. 3 the Hainan order doesn’t involve properties delivered or pending delivery.
Evergrande Demolition Order Affects 39 Buildings (8:58 a.m. HK)
Evergrande will proactively communicate and handle the case in accordance with the demolition order from the local government in Hainan province, according to a statement posted on its unit’s WeChat page.
The developer added that the order affects 39 buildings and has no impact on the rest of the development.
Beijing Sends Warning With Evergrande (8:41 a.m. HK)
China’s authorities are sending a clear signal that there will be no let up in their crackdown on the property market, meaning the industry will remain a concern for investors for some time to come.
Local governments are getting tough, with an order that Evergrande demolish 39 buildings in 10 days the latest extreme example. Similarly, the Shenzhen government’s bailout of China South City last week was heavily discounted, which “may indicate the state conducted very tough M&A price negotiations,” according to Bloomberg Intelligence credit analyst Andrew Chan.
China Developers Suffered Sales Drop Last Year, Report Says (8:10 a.m. HK)
The combined home sales for China’s top 100 developers fell 3.5% from a year earlier to 11.08 trillion yuan ($1.7 trillion) in 2021, the Shanghai Securities News reported, citing data from the China Real Estate Information Corp.
Nearly 40% of the top 100 recorded a drop in home sales last year, while more than 80% of the firms that disclosed full-year sales guidance failed to meet their 2021 targets.
Greentown China to Redeem Two Perpetual Securities Callable 2022 (5:37 a.m. HK)
Greentown China plans to redeem two perpetual capital securities callable 2022 in full on Feb. 8 and will cancel the securities after redemption.
The two are $400 million senior perpetual capital securities callable 2022 and $100 million senior perpetual capital securities callable 2022 issued by Champion Sincerity Holdings Ltd., it said in a stock exchange filing.
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