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Evergrande shares resume trading

After demolition order.
The Evergrande Center, with its signage removed, in Shanghai. Image: Qilai Shen/Bloomberg
China Evergrande Group shares climbed after a volatile resumption of trading in Hong Kong’s afternoon session, as the company said it would work with authorities following an order to demolish 39 buildings in Hainan province.

News of the demolition order helped trigger a slump on Monday in other developer stocks, which rallied on Tuesday. Traders struggled to pin down a major reason for the gains, other than short covering. An index of Chinese property firms listed in Hong Kong was 3.8% higher as of 1:29 p.m. local time. Evergrande shares rose as much as 10% and fell as much as 2.5%.

Elsewhere, some holders of Kaisa Group Holdings Ltd. dollar bonds said they’ve yet to receive interest payments due last week, after the Chinese developer defaulted on other obligations in December.

Key developments:

  • Evergrande’s 2021 Sales Plunge 39% as Home Sales Almost Frozen
  • Evergrande to Resume Trading 1pm HKT
  • 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

Evergrande’s 2021 Sales Plunge 39% as Home Sales Almost Frozen (1:12 p.m. HK)
Evergrande’s property sales plummeted in 2021, the first annual drop in at least a decade, as the giant developer slipped into default and buyer confidence faded.

Contracted sales last year plunged 39% to 443 billion yuan ($70 billion), according to Bloomberg calculations based on preliminary company data. The preliminary results suggest sales at the world’s most indebted developer have been almost frozen since October, when its liquidity woes intensified.

Evergrande to Resume Trading (12:15 p.m. HK)
Evergrande says it has received an administrative penalty notice issued by Danzhou Comprehensive Administrative Law Enforcement Bureau regarding 39 buildings on Ocean Flower Island, according to a Hong Kong stock exchange filing. It said it would actively communicate with the authority to resolve the issue properly.

Some Kaisa Bondholders Yet To Get Coupon Payments Due Last Week (11:28 a.m. HK)
Kaisa owed $48.75 million of interest on Dec. 30 on an 8.5% bond due 2022 and $105.35 million on a 9.375% 2024 note. Kaisa has 30-day grace periods to make those payments, before an event of default could be declared.

Two investors who hold both of those bonds said they hadn’t received the interest as of 12 p.m. Monday New York time, speaking on condition of anonymity to discuss private investments. One of the investors also holds a third dollar security that had a $17.5 million coupon due by the end of a grace period Dec. 31, and hadn’t gotten that interest payment either.

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 more than 3%, with Guangzhou R&F Properties Co. rising as much as 14% before paring. Shimao Group Holdings Ltd. 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 Holdings Ltd. 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 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 Holdings Ltd. 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.

© 2022 Bloomberg L.P.

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