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Business News/ News / World/  Chinese President Xi Jinping's housing crisis efforts jeopardized as Evergrande face trouble

Chinese President Xi Jinping's housing crisis efforts jeopardized as Evergrande face trouble

Fresh drama at property developers jeopardizes President Xi's efforts to end the housing crisis in China

China reels form housing crisis

Fresh drama at Chinese property developers jeopardizes President Xi Jinping's efforts to end the housing crisis, as Evergrande revisits its debt restructuring plan, China Oceanwide faces liquidation, and Country Garden tries to avoid a potential default. The news has fueled investor confusion over whether authorities have a unified plan to stabilize the market.

A Bloomberg Intelligence gauge of Chinese developer shares fell 1.2% on Tuesday, a day after dropping the most this year as the crisis at Evergrande entered a new phase. China Evergrande Group shares slid for a second consecutive session on Tuesday, dropping as much as 8% after a unit of the embattled property developer missed an onshore bond repayment.

Also read: ‘Empty houses everywhere': Former Chinese official's rare public critique on China's economy

Evergrande's main domestic unit, Hengda Real Estate Group, said in a Shenzhen stock exchange filing late on Monday it had failed to pay the principal and interest for a 4 billion yuan ($547 million) bond that was due by 25 September.

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Hengda said it will actively negotiate with bondholders in a bid to reach a solution as soon as possible while working to resolve the debt risks and safeguard creditors' rights and interests.

Also read: Chinese authorities detain Evergrande staff amid crisis in property market

Evergrande has been seeking creditors' approval for its proposals to restructure offshore debt worth $31.7 billion which includes bonds, collateral, and repurchase obligations.

CHINA HOUSING CRISIS

China home prices dropped at a faster pace in August, underscoring why policymakers stepped up efforts at the end of the month to address a slowdown. New-home prices in 70 cities, excluding state-subsidized housing, declined 0.29% last month from July when they fell 0.23%.

China at the end of August unveiled fresh reductions in down-payment requirements for homebuyers and allowed lenders to lower rates on existing mortgages to stimulate purchases.

Residential sales by value hovered near the weakest monthly level in almost six years, up 2.9% in August from July, according to Bloomberg calculations based on separate official data. Real estate development investment, which contributed about 11% of economic output last year, stayed almost unchanged from July, nearing the lowest level this year.

Former People’s Bank of China policymaker Li Daokui said a recovery may take as long as a year and Beijing should do more to encourage lending to cash-strapped developers.

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