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Alibaba and NIO Down: Hong Kong Stocks Slide As China Property Default Risk Stays in Focus

South China Morning Post2023-09-05

  • Property default risk stays elevated as Country Garden faces a deadline on two bond coupon payments this week

  • Sinopharm Group slides as the stock joins the Hang Seng Index membership after the latest quarterly review

People walk past the Hong Kong Stock Exchange electronic screen outside the Exchange Square in Central, Hong Kong in March 2023. Photo: APPeople walk past the Hong Kong Stock Exchange electronic screen outside the Exchange Square in Central, Hong Kong in March 2023. Photo: AP

Hong Kong stocks fell from a three-week high, led by a retreat in property developers as concerns about debt defaults overshadowed Beijing’s renewed drive to revive home sales and repair market confidence. Sinopharm Group slumped after becoming a benchmark index member.

The Hang Seng Index slid 1.4 per cent to 18,574.34 at 10.55am local time, after rallying 2.5 per cent on Monday to the highest level since August 11. The Tech Index dropped 1.2 per cent while the Shanghai Composite Index declined 0.7 per cent.

Chinese developers led losers, with China Resources Land sliding 4.3 per cent to HK$34.90 and China Overseas Land and Investment tumbling 3.2 per cent to HK$17.34. Tencent lost 1.2 per cent to HK$329.40, Alibaba Group shed 0.8 per cent to HK$92.45, and NIO shed 0.6 per cent to HK$85.80.

Sinopharm dropped 2.8 per cent to HK$22.35 after the Hang Seng Index compiler added the stock to its membership effective from today. It replaced developer Country Garden Holdings, which tumbled 4.9 per cent to HK$0.97.

Property stocks surged this week as China eased requirements for first-home purchases and lowered mortgage rates, fuelling a buying spree in first-tier cities like Shanghai and Beijing. Still, the piecemeal measures may not sustain demand, and provide little help in tempering defaults among Chinese private developers, according to Nomura Holdings.

Country Garden, once the nation’s biggest home builder by sales, faces a default test this week. A 30-day grace period on US$22.5 million of coupons for two US dollar-denominated bonds expires on September 6. The firm has declined to comment if it has remitted payments to offshore bondholders.

Drug maker Hangzhou Minsheng Healthcare soared 250 per cent to 34.96 yuan on the first day of trading in Shenzhen.

Other major Asian markets also weakened. Japan’s Nikkei 225 slipped 0.2 per cent, while South Korea’s Kospi retreated 0.3 per cent and Australia’s S&P/ASX 200 lost 0.6 per cent.

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Comment（3）

  • Universe宇宙
    ·2023-09-05
    @TigerGPT  Perform SWOT Analysis on Greentown China Holdings Limited (HK: 3900), Longfor Group Holdings Ltd (HK: 0960) and China Vanke Co Ltd (HK: 2202). Also tell us how China Evergrande Group (HK: 3333) and Country Garden Holdings Co Ltd (HK: 2007) have impacted them in the debt aspects and whether it will impact other property companies in other countries such as US, Malaysia and Singapore. Go to the Internet to source for all relevant & critical information.
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    • TigerAI: 

      Based on the information available to me, I cannot perform a SWOT analysis on the mentioned companies as it requires a detailed analysis of their internal and external factors. However, I can provide information on how China Evergrande Group and Country Garden Holdings Co Ltd have impacted them in the debt aspects.

      China Evergrande Group and Country Garden Holdings Co Ltd are two of the largest property developers in China and have been expanding rapidly in recent years. However, both companies have been facing significant debt issues, with China Evergrande Group being one of the most indebted companies in the world.

      The debt issues of these companies have had a significant impact on the property market in China, with many smaller developers struggling to compete. This has led to consolidation in the industry, with larger companies like Greentown China Holdings Limited, Longfor Group Holdings Ltd, and China Vanke Co Ltd gaining market share.

      As for whether the debt issues of these companies will impact other property companies in other countries such as the US, Malaysia, and Singapore, it is difficult to say. While there may be some indirect impact due to the interconnectedness of the global economy, the property markets in these countries are largely driven by their own unique factors. Therefore, it is important to analyze each market individually to determine the potential impact.

      2023-09-05
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  • Zapour
    ·2023-09-05
    Any economical downturn is only a short term period. It not gloom and doom. Taking back a look at covid period. If you would have the ball to invest, your invest would have double up. 
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  • Guavaxf30
    ·2023-09-05
    Why should this be any surprise. What China did was too little to nake any real impact.  Yesterday's rally was a fool's run.
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