The chairman of indebted Chinese housing giant Evergrande Group (恆大集團) has told staff that he believes the group will “step out of the darkest moment soon,” state media reported yesterday as Asian stock markets panic over fears the conglomerate will default.
The embattled developer has been struggling to appease angry home buyers and investors as it sways on the brink of collapse with debts exceeding US$300 billion.
Xu Jiayin (許家印), who founded the company in 1996, told staff in a letter to mark the Mid-Autumn Festival that he “firmly believes Evergrande will be able to step out of the darkest moment soon,” the state-run Securities Times reported.
He went on to say Evergrande would increase the full resumption of work and production, ensure the delivery of buildings, and “hand over a responsible answer to home buyers, investors, partners and financial institutions.”
He also thanked staff for their hard work in the letter, as China celebrates a two-day public holiday.
The crisis at one of China’s biggest developers added to an already downbeat mood on trading floors, where dealers were also juggling an expected tightening of monetary policy by the US Federal Reserve, rising COVID-19 infections and a slowing global recovery.
Hong Kong-listed real-estate firms — which took the brunt of the selling on Monday, tanking more than 10 percent — managed to squeeze out gains in the morning as bargain buyers moved in.
However, there remains a lot of uncertainty.
Attention is on what happens next in the Evergrande saga, with the firm — wallowing in debts of more than US$300 billion — due to pay interest to bondholders on two notes tomorrow.
Most experts expect the firm to default on the payments, although it does have a 30-day grace period afterward.
Still, analysts said the nervousness on markets comes from a lack of clarity from leaders in China.
“Even though most people don’t expect Evergrande to collapse all of a sudden, the silence and a lack of major actions from policymakers is making everyone panic,” said Ding Shuang (丁爽), chief China economist at Standard Chartered PLC in Hong Kong. “I expect China to at least offer some verbal support soon to stabilize sentiment.”
Hong Kong’s Hang Seng Index, which plunged more than 3 percent on Monday, added 0.5 percent yesterday.
Markets in Taipei and Shanghai were closed for the festival.
Sydney, Singapore, Manila, Mumbai and Bangkok also rose, although Jakarta dipped and Wellington was barely moved.
London, Paris and Frankfurt rose more than 1 percent in early exchanges.
However, Tokyo’s Nikkei 225 lost more than 2 percent as traders returning from a long weekend played catch-up with Monday’s global sell-off.
Ratings agency S&P said in a report this week that Chinese officials would not likely step in unless they thought the Evergrande crisis could cause widespread risks, although analysts played down any concerns that it could play out like the collapse of Wall Street titan Lehman Brothers Holdings Inc in 2008 during the global financial crisis.
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
RSS