Evergrande shares soars by at least 70%

Evergrande, a Chinese real estate developer, saw its shares rise by as much as 82% on Wednesday, driving the Hang Seng Index higher.

Although the stock’s gains have since been curtailed, it was still roughly 70% higher.

The HSI’s largest gainer was the real estate sector, while industrial and health care firms kept the index’s overall value in the red.

While the Hang Seng Mainland Property Index increased by roughly 4%, other stocks including Country Garden Holdings and Logan Group also soared, rising as much as 26% and 28%, respectively.

 The gains follow Country Garden apparently narrowly averting default on Tuesday by paying $22.5 million in bond coupon payments.

Although Country Garden submitted the bond installments hours before a 30-day grace period ended, the payments were actually due in August.

Ever since Evergrande went into debt in 2021, China’s real estate market has sputtered. The company started trading last Monday, and in its first session in 17 months, it closed about 80% lower. Tuesday’s closing price for Evergrande shares was 35 Hong Kong cents.

In the previous year, other real estate stocks have also fallen on contagiousness worries. Country Garden shares have decreased 53% so far this year, while Logan shares have decreased 18%.

According to a CNBC translation, a commentary published on Wednesday in China’s state-owned Securities Times demanded the removal of “policies restricting property purchases in cities other than the hottest top tier cities” as soon as feasible.

The commentary claimed that “it is no longer appropriate to retain restrictive policies that were previously implemented to curb speculation in the current situation where there are major changes in the demand-supply relationship in the property market.”

It came to the conclusion that there was a “urgent need” to strengthen policy support in order to raise sales and so release demand that had been constrained by these strict housing policies.

Country Garden continues to allow bondholder votes

The voting session for Country Garden Holdings’ bondholders was extended until 10 p.m. on September 1 to give them more time to consider the real estate developer’s proposal to delay payments and prevent a default on a private onshore bond.

According to a report by Caixin, the developer delayed the vote at 9:30 last night, 30 minutes before bondholders were scheduled to cast their last electronic votes. Requests for comment were not immediately answered by Country Garden.

Recently, Country Garden, the largest developer in China by sales, sought to spread out the interest and principal payments on a 3.9 billion yuan ($535 million) note over a period of three years in seven parts.

However, some bondholders refused to accept this and demanded full repayment, causing Country Garden to move the vote from last Friday to Thursday at 10 p.m. Hong Kong time and request the 40-day extension in its place.

In its initial proposal, Country Garden suggested that creditors postpone receiving 44% of their investment principal until September 2026.

According to persons acquainted with the situation, holders of 10.5 percent of the bonds had advocated putting the developer in default and rejecting Country Garden’s request for a postponement.

The vote’s findings came after the corporation on Wednesday announced a record loss for the first half of the year of US$6.7 billion and issued a default warning. From 123.48 billion yuan a year ago, its cash balance dropped by 21% to 101.12 billion yuan.

For almost a month, the developer has been attempting to pay off its debt and stay current. For instance, it announced on Wednesday a project to raise around HK$270 million through stock financing to pay off debts to another company.

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