Dozens of people yesterday protested outside the headquarters of Chinese property giant Evergrande Group (恆大集團) after the debt-laden firm said that it was under “tremendous pressure” and might not be able to meet its repayments.
The Hong Kong-listed developer is sinking under a mountain of liabilities totaling more than US$300 billion after years of borrowing to fund rapid growth.
The group was downgraded by two credit rating agencies last week, while its shares tumbled below their 2009 listing price, with a barrage of bad headlines and speculation of its imminent collapse on Chinese social media.
Photo: AFP
An estimated 60 to 70 people gathered outside Evergrande’s headquarters in Shenzhen, China, jostling with police and demanding answers.
Some were contractors owed money, others anxious investors, reporters at the scene said.
“Our boss is owed over 20 million yuan [US$3.1 million] and many people here are owed even more,” a man who gave his surname only as Chen (陳) told reporters. “We are definitely very anxious. There’s no clear explanation right now ... they should have paid the money when it was due.”
Evergrande’s plight has raised fears of a contagion across the debt-mired Chinese property sector — which accounts for more than one-quarter of the world’s second-largest economy — with a knock-on effect on banks and investors.
On Monday, the company said that it would avoid bankruptcy.
However, it issued another statement yesterday to the Hong Kong stock exchange, saying it had hired financial advisers to explore “all feasible solutions” to ease its cash crunch.
The statement warned that there was no guarantee Evergrande would meet its financial obligations.
The firm blamed “ongoing negative media reports” for damaging sales in the pivotal September period, “resulting in the continuous deterioration of cash collection by the group, which would in turn place tremendous pressure on ... cashflow and liquidity.”
Shares in the firm fell more than 11 percent yesterday and are down almost 80 percent since the start of the year.
The company has about 1.4 million properties that it has committed to complete — about 1.3 trillion yuan in pre-sale liabilities as of the end of June — an estimate by Capital Economics said.
“Evergrande’s collapse would be the biggest test that China’s financial system has faced in years,” Capital Economics lead Asia economist Mark Williams said.
Yet “markets don’t seem concerned about the potential for financial contagion at the moment,” Williams said, adding “that would change in the event of large-scale default,” which would likely prod the People’s Bank of China to step in and buttress the teetering developer.
“The most likely endgame is now a managed restructuring in which other developers take over Evergrande’s uncompleted projects in exchange for a share of its land bank,” he said.
The pictures of angry investors outside the firm’s headquarters could also cause alarm in Beijing, where leaders are keen to keep a lid on social unrest.
Some creditors have demanded immediate payback of loans, Bloomberg News reported earlier this month.
Evergrande has already sold stakes in some of its wide range of assets and offered steep discounts to offload apartments, but still reported a 29 percent slide in profit for the first half of the year. It is also struggling to sell its Hong Kong headquarters, even at a loss.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS