In today’s roundup of regional news headlines, investors fret over billions in expected losses on Chinese developers’ offshore bonds, Shenzhen-based Logan Group’s shares nosedive as trading resumes on the Hong Kong stock exchange, and Ping An Insurance defends its call to spin off HSBC’s Asia business.
Investors are pricing in almost $130 billion in losses on Chinese property developers’ dollar debt on mounting worries that the country’s housing market will face a protracted crisis unless Beijing steps in with a large-scale bailout.
Two-thirds of the more than 500 outstanding dollar bonds issued by Chinese developers are now priced below 70 cents on the dollar, a common threshold for distressed status, according to a Financial Times analysis of Bloomberg data. Read more>>
Asia’s largest high-yield bond funds are steering clear of China’s real estate sector as a worsening liquidity crisis weighs on the debt, according to research firm Morningstar.
The average weighting of China property bonds in the Asian junk funds dropped to 16 percent in June from almost 28 percent at the end of last year, as a crackdown on borrowing and a plunge in housing sales continue to batter the industry. Read more>>
Chinese developer Logan Group’s shares plunged in Hong Kong after resuming trading, as full-year revenue missed estimates and the company weighs a restructuring to deal with its mounting debt.
The stock dropped as much as 58 percent on Wednesday, the most since listing in 2013. The developer has lost more than four-fifths of its value as the nation’s real estate sector reels from COVID-19 restrictions and a slowing economy. Read more>>
China’s Ping An Insurance Group defended its call to spin off HSBC’s Asia business, saying it cared about investment returns from its large stake in the bank and that it was not an activist investor.
“It is a significant investment and we’ve invested in it for seven years,” Jessica Tan, Ping An’s co-CEO, told Reuters on Wednesday, when asked about the drivers behind the insurer urging Europe’s largest bank to consider a spin-off. Read more>>
A key shareholder in Australia’s most expensive casino development has a long history of association with organised crime figures and people blacklisted by gambling regulators around the world, an ABC investigation has confirmed.
Chow Tai Fook, controlled by the powerful Cheng family in Hong Kong, was endorsed by the Queensland government in 2015 as a fit and proper partner in its new A$3.8 billion ($2.6 billion) casino development at Queen’s Wharf. Read more>>
Operators of co-living spaces in Hong Kong, who have endured more than two years of lower rents and suppressed occupancy rates because of the COVID-19 pandemic, remain optimistic about the segment’s prospects.
Rents for co-living units have declined by as much as a quarter over the last three years, according to one analyst. Another says 40 percent of co-living units in Hong Kong have been unoccupied since last year. Yet operators are investing both overseas and in the local market, and some see demand in Hong Kong already picking up. Read more>>
Hong Kong developer Chinese Estates Holdings plans to build a new stepped 21-storey office building and rejuvenate the listed former Daily Express newspaper headquarters at 120 Fleet Street in London.
ISG, Lendlease and Mace are understood to be in the race for the 600,000 square foot (55,742 square metre) flagship build project, which will start construction next summer when demolition is complete. Read more>>
China’s top leadership is preoccupied with political manoeuvring to agree on a rescue plan to end the housing slump, while intensifying geopolitical risk means Chinese assets will be volatile under the current administration and only selectively investable, strategists said.
Hopes for some sort of intervention by Beijing to overcome a slump in the housing sector is “wishful thinking”, said Lawrence Brainard, chief emerging markets economist at London-based research firm TS Lombard. China’s more assertive foreign policy has forced investors to add geopolitical risk, making assets “only selectively investable”, according to Morgan Stanley Investment Management. Read more>>