Read more about China property fear spreads beyond Evergrande crisis, roiling markets on Business Standard. Intensifying concerns about China Evergrande Group’s debt crisis dragged down everything from bank stocks to Ping An Insurance Group Co. and high-yield dollar bond
Growing investor angst about China’s real estate crackdown rippled through on Monday, adding pressure on Xi Jinping’s government to prevent financial contagion from destabilizing the world’s second-largest economy. Hong Kong real estate giants including Henderson Land Development Co. suffered the biggest selloff in more than a year as traders speculated China will extend its property clampdown to the financial hub. Intensifying concerns about China Evergrande Group’s debt crisis dragged down everything from to Ping An Insurance Group Co. and high-yield dollar bonds. One little-known Chinese property developer plunged 87% before shares were halted. Hong Kong’s benchmark Hang Seng Index slumped 3.3%, its biggest loss since late July. The selling also spilled over into the Hong Kong dollar, offshore yuan and S&P 500 Index futures. Holiday closures in much of Asia may have exacerbated the volatility, traders said. Faced with uncertainty over how far Xi is willing to go with his market-roiling campaigns to achieve “common prosperity” and rein in overindebted companies, many investors are choosing to sell first and ask questions later. Interest payment deadlines this week on several Evergrande bonds and bank loans add another layer of risk as market participants brace for what could be one of China’s largest-ever debt restructurings. “The price action across several asset classes in Asia today is horrendous due to rising fears over Evergrande and a few other issues, but it could be an overreaction due to all of the market closures,” said Brian Quartarolo, portfolio manager at Pilgrim Partners Asia.
