Evergrande Shares Sank after a Failed $2.6B Stake Sale

On Thursday, shares of China Evergrande Group sharply sank on a return trade after it formally abandoned plans to sell its $2.60 billion stakes. 

Accordingly, the highly indebted property developer plunged 12.54% or 0.04 points to $0.33 per share. 

Earlier this month, Evergrande Group was in talks to sell a 50.10% stake in its property services segment to Hopson Development Holdings. 

However, on Wednesday, a stock exchange filing explained that Hopson did not meet some prerequisites to put in a general offer. 

Conversely, the smaller real estate company hiked 5.15% or 0.16 points to $3.34 per share today. 

Moreover, Evergrande Group, China’s second-largest developer by sale, holds a total of $300.00 billion liabilities. Subsequently, its debt equated to 2.00% of the local gross domestic product.

Currently, the cash-strapped business scrambles to raise funds to pay its debt obligations. 

In addition, it would officially default if it did not comply with an already due March 2022 bond coupon payment on October 25.

Consequently, concerns about its cash crunch rapidly hiked, strengthening woes of a likely spill over into the real estate market. In addition, it could cause a global economic contagion. 

Then, the recent disclosure of Evergrande Group came after the Chinese government reassured homebuyers and market participants.

Subsequently, local authorities guaranteed that the developer’s woes would not turn into a full-scale crisis. 

Last week, they noted that the current risks were controllable, and capital demand from property companies was being met. 

Correspondingly, they convinced the public to handle the default risks adequately and curb excessive debt more broadly.

Overall, Chinese property developers have a total outstanding debt of $5.24 trillion, reflecting a third of the country’s gross domestic product.

Asia-Pacific Stocks Mix as Evergrande Group Drops

Meanwhile, shares in the Asia-Pacific region struggled for direction as investors monitored the moves of Evergrande Group.

In China, the Shanghai Composite index improved 0.46% or 16.62 points to $3,603.62 per share. 

Inversely, the Shenzhen Component index shed 0.05% or 7.94 points to $14,444.31 per share. 

At the same time, Hong Kong’s Hang Seng index lost 0.29% or 75.76 points to $26,060.26 per share. 

In Japan, the benchmark Nikkei 225 plummeted 1.56% or 456.67 points to $28,798.88 per share. 

Consequently, the TOPIX index plunged 1.16% or 23.57 points to $2,004.10 per share. 

Similarly, South Korea’s KOSPI decreased 0.07% or 2.13 points to $3,011.00 per share. 

Then, Australia’s S&P/ASX 200 index edged up 0.07% or 5.40 points to $7,419.10 per share. 

Furthermore, rivals of Evergrande Group posted gains on the trading market. 

For instance, Country Garden Holdings elevated 4.10% or 0.04 points to $1.05 per share. 

At the same time, China Vanke boosted 3.85% or 0.12 points to $3.25 per share.