Fears about the future of Chinese real estate giant Evergrande Group have returned amid news it could default on its latest debt repayment.
Shares of the company, whose crisis has spread to all real estate and banking sectors, plunged as much as 20% on Monday to a record low.
In a statement released over the weekend, Evergrande said it could not guarantee “the performance of its financial obligations.”
He is owed £ 300 billion (£ 226 billion), including to companies outside of China.
According to reports, the founder and billionaire of the property developer, Hui Ka Yan, has been summoned by Chinese officials to explain the latest situation.
The Evergrande press release said: “Given the group’s current liquidity situation, there can be no assurance that the group will have sufficient funds to continue to meet its financial obligations.
“The company has received a demand to perform its obligations under a guarantee in the amount of approximately $ 260 million.
“In the event that the group is unable to meet its guarantee obligations or certain other financial obligations, this could lead creditors to demand an acceleration of repayment.
Conita Hung, chief investment officer at Tiger Faith Asset Management, said that despite Evergrande’s attempts to sell assets for months in an attempt to repay debts, the latest statement suggested the company was “going to surrender and need ‘aid”.
“This sends a very bad signal,” she said, adding that Evergrande’s problems will take years to resolve, even with the help of the Chinese government.
Over the weekend, the central bank, banking and insurance regulator and securities regulator also issued statements, saying the risk to the real estate sector could be contained.
China’s booming housing and commercial real estate market prompted Xi Jinping’s government in Beijing to restrict reckless lending to a sector that some experts said was in danger of collapse.
Evergrande was one of many developers deprived of cash due to regulatory restrictions on borrowing, but this led to overseas defaults, downgrades, and sales of stocks and bonds. developers.
To stem the unrest, regulators in October urged banks to ease developer loans and allow real estate companies to raise more money from investors.
Small real estate developer Sunshine 100 China Holdings on Monday said it had failed to repay a $ 170 million debt “due to liquidity issues resulting from the negative impact of a number of factors, including ‘macroeconomic environment and the real estate sector’.