Chinese developer Kaisa halts trading as property woes grow

Chinese developer Kaisa Group halted trading of its shares in Hong Kong Friday, on the back of deepening concerns over the company’s cash flow and China’s key property sector.Beijing has been clamping down on China's colossal property sector in a bid to rein in excessive debt

Kaisa’s woes come as a liquidity crisis at one of the nation’s biggest property developers Evergrande threw a spotlight on the industry in recent months, following a state crackdown that has rattled investors and fuelled fears of wider economic fallout.

The trading halt on Friday came amid Chinese media reports that wealth management products related to Kaisa had not been repaid when due, and that chief executive Kwok Ying-shing admitted the company was facing “unprecedented pressure on its liquidity”.

In a brief notice to the Hong Kong stock exchange Friday no reason was given for the suspension.

Last week, ratings agencies Fitch and S&P both downgraded Kaisa, citing refinancing risks.

Fitch said the downgrade was due to Kaisa’s “limited funding access and uncertainty over the refinancing of a significant amount of US-dollar bond maturities and coupon payment.”

Troubles in China’s property sector are weighing on authorities’ resolve to forge ahead with reforms to rein in excessive debt.

Evergrande, which is bogged down in a sea of more than $300 billion in liabilities, plunged into crisis after Beijing began clamping down on the country’s colossal property sector.

There have been suggestions that Beijing could be rolling back some of those regulations though, with state media recently hinting that local banks had begun easing some credit controls on homebuyers and developers on orders from the central bank.

For now, all eyes are on another key deadline with an $82.5 million coupon payment by Evergrande coming up on Saturday.

As the Shenzhen-based group works to shed assets, e-mobility firm Bedeo said Thursday that it had acquired Protean Electric from a subsidiary of Evergrande New Energy Vehicle Group.

Chinese authorities have urged Evergrande billionaire founder Xu Jiayin, also known as Hui Ka Yan, to use his personal fortune to alleviate the company’s debt crisis, according to reports.

Bloomberg reported that his luxury assets alone including a 60-metre yacht, business jets and houses under his name have an estimated value of $485 million, which could help cover the bond coupons that are yet to come due or have grace periods ending this year.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s