Asia report: markets tumble as another Chinese real estate company misses payment

Markets were mostly weaker in Asia on Friday, with the exception of the antipodes exchanges, as another Chinese real estate game found itself in the limelight in Hong Kong.

In Japan, the Nikkei 225 was down 29,611.57 as the yen weakened 0.11% against the dollar to last trading at 113.88 JPY.

Fashion company Fast retail was up 1.02%, while among the benchmark’s other major components, the automation specialist Fanuc was down 0.46% and the tech conglomerate SoftBank Group lost 0.34%.

The largest Topix The index fell 0.69% as trade in Tokyo ended, closing at 2,041.42.

On the continent, the Shanghai Composite was down 1% to 3,491.57, and the smallest, tech-rich Shenzhen Composite was 0.77% lower at 2,406.42.

South Korea Kospi was 0.47% less than 2,969.27, while the Hang Seng Index in Hong Kong led the region’s losses, falling 1.41% to 24,870.51.

Chinese real estate developers were in the red in the special administrative region, with China Evergrande down 2.54%, China Vanke by 1.39%, and Sunac China plunging 6.78%.

These moves came after Hong Kong’s actions in an industry counterpart Kaisa Group, as well as several affiliated companies, were suspended from their activities.

Kaisa Group confirmed Thursday that its financial transaction had missed a payment on one of its wealth management products, raising fears of liquidity.

“The property developer has been suspended from operations pending an announcement containing inside information, following missed payments on wealth management products yesterday and a statement from the company referring to a” unprecedented pressure “on liquidity”, said Pantheon Macroeconomics Chinese chief economist Craig Botham.

“With total liabilities of 231 billion CNY in 2020, compared to 1.95 billion CNY of Evergrande, Kaisa is smaller than the poster child of the crisis, but he remains the 25th Chinese developer in terms of sales. and its third-largest borrower in dollar debt, with $ 3.2 billion in bonds maturing by the end of next year.

“Several developers saw their stocks drop significantly on the news, and a Chinese dollar high-yield debt index fell about 2%, extending the largest weekly drop in a month.”

Botham said the People’s Bank of China “is responding reluctantly” by moderating cash withdrawals, as reported on Thursday.

“Friday’s gross injections were raised to CNY 100 billion, from CNY 50 billion on Thursday, for a net withdrawal of CNY 100 billion.

“Given the pressure not only on the offshore bond markets but increasingly onshore, we believe further action will be needed and uphold our call for a reduction in the RRR this quarter.

“It appears that Evergrande’s success in avoiding a default has led to some complacency among authorities and investors regarding the Chinese real estate market.”

Kaisa, said Craig Botham, should refocus attention.

Blue-chip tech stocks painted a mixed picture in Seoul, with Samsung Electronics down 0.57%, while SK Hynix increased by 0.94%.

Oil prices were higher as the region entered the weekend, with Brent crude rising 0.5% to $ 80.94 a barrel, and West Texas Intermediate advancing 0.85% to 79, $ 48.

In Australia, the S & P / ASX 200 managed gains of 7,456.90, while across the Tasman Sea, New Zealand S & P / NZX 50 was up 1.01% to 13,074.61.

The decline under the dollar was both weaker against the greenback, with the Aussie losing 0.42% to AUD 1.3570 and the Kiwi declining 0.31% to NZD 1.4123.

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Elaine R. Knight

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