The Chinese group Kaisa interrupts its exchanges due to the nervousness of the real estate market | Property

Chinese developer Kaisa Group has halted trading of its shares in Hong Kong amid growing concerns over the company’s cash flow and key China’s real estate sector.

Kaisa’s woes come as a liquidity crunch at one of the country’s largest real estate developers, Evergrande Group, has shone the spotlight on the industry in recent months, following a state crackdown which rocked investors and heightened fears of wider economic fallout.

The trading halt on Friday came as Chinese media reported that Kaisa-related wealth management products had not been redeemed when due, and chief executive Kwok Ying-shing admitted the company was doing so. faced with “unprecedented pressure on its liquidity”.

A brief notice on the Hong Kong Stock Exchange on Friday offered no reason for the suspension.

The rating agencies Fitch and S&P downgraded Kaisa last week, citing refinancing risks.

Fitch said the downgrade was due to “Kaisa’s limited access to financing and the uncertainty over the refinancing of a large amount of US dollar bond maturities and coupon payments.”

“Kaisa could possibly be another Evergrande,” said Raymond Cheng, head of China research at CGS-CIMB Securities, adding that the corporate struggles had heightened market concerns about developer liquidity conditions.

Hong Kong-listed Kaisa shares, which have a market value of around $ 1 billion, plunged more than 15% on Thursday to an all-time low.

At the start of trading in Hong Kong, a sub-index following the mainland’s real estate sector fell more than 2%, worsening its losses over the past two weeks to nearly 20%.

Evergrande shares fell 1.7%. According to Duration Finance, the company’s October 2022 11.5% bond fell more than 10% to a yield above 300 percent, pushing developer bonds down sharply.

The Kaisa Group problems come as struggling real estate giant Evergrande faces a key deadline on Saturday when a $ 82.5million coupon payment falls due [FILE: John Sibley/Reuters]

The difficulties of the Chinese real estate sector weigh on the authorities’ willingness to go ahead with reforms to curb over-indebtedness.

Evergrande, which is grappling with more than $ 300 billion in liabilities, plunged into crisis after Beijing began cracking down on the country’s colossal real estate sector.

State media recently hinted at a rollback in some regulations, reporting that local banks have started relaxing some credit checks on homebuyers and developers on orders from the central bank.

Evergrande faces a key deadline on Saturday with an upcoming $ 82.5 million coupon payment.

Debt crisis

As the Shenzhen-based group struggles to get rid of its assets, electric mobility company Bedeo said Thursday it had acquired Protean Electric from a subsidiary of Evergrande New Energy Vehicle Group.

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

Bloomberg reported that his only luxury assets – including a 60-meter (196-foot) yacht, business jets and homes under his name – are estimated to be worth $ 485 million, which could help cover bond coupons that have yet to be matured or have grace periods ending this year.

Penny D. Jackson