Fresh concerns regarding the health of China’s real estate market weighed on investor emotion on the first trading day of 2022, after the city’s stocks had posted the worst results of any significant international market the previous year.
By the midday pause on Monday, the Hang Seng index (.HSI) had dropped 144.98 points, or 0.62 percent, to 23,252.69 points. The Hang Seng China Enterprises index (.HSCE) dropped 0.85% to 8,166.54 points.
Last year, the Hong Kong benchmark did lose 14.1%, its worst annual performance since 2011 and the poorest performing significant international market in 2021, as a result of declines in Chinese big tech companies and concerns about the health of China’s real estate sector.
Mainland Chinese markets were set to close for the holiday, and the volume of trading in Hong Kong was light. A total of 322.68 million Hang Seng index stocks were traded, accounting for roughly 20 percent of the market’s 30-day running average.
China Evergrande stocks have been temporarily suspended
The shares of China Evergrande Group (3333.HK) were suspended from trading on Monday awaiting the publication of “internal information,” according to the embattled real estate developer, who did not elaborate.
Evergrande, the world’s most financially strapped developer, is suffering to repay more than $300 billion in debts, which include nearly $20 billion in international market bonds that were considered in cross-default by rating agencies last month due to late payments.
The real estate developer did miss new coupon payments totaling $255 million that were due last Tuesday, despite the fact that both have a 30-day grace period.
The company has formed a risk management committee, with many members drawn from state-owned enterprises, and has stated that it will actively engage with its creditors.
Over the weekend, a news agency reported that a local government on the Chinese beach resort of Hainan had instructed Evergrande to destroy its 39 residential areas within ten days related to illegal construction on December 30.
According to the reports, the constructions occupied over 435,000 square meters, citing a formal statement to Evergrande’s division in Hainan.
Evergrande has yet to respond to a request for a remark on the Hainan project.
Evergrande scaled back strategies to pay back investors in its money management commodities on Friday, declaring each investor may expect to receive 8,000 yuan ($1,257) per month as repayment for three months, regardless of when the investment matures.
Evergrande shares fell 89 percent last year, closing at HK$1.59 on Friday.
Its EV unit, China Evergrande New Energy Vehicle Group (0708.HK), inverted early losses to soar 14 percent in early afternoon trade on Monday, while its real estate management unit, Evergrande Services (6666.HK), also rose 1 percent.
A sub-index of mainland property stocks (.HSMPI) fell 3.76 percent and was approaching a four-and-a-half-year low.
Tech behemoths (.HSTECH) fell 0.98 percent.
The Hang Seng sub-index tracking energy shares (.HSCIE) rose 0.8 percent, while the IT sector (.HSCIIT) fell 1.15 percent, the financial sector (.HSNF) rose 0.29 percent, and the property sector fell 1.15 percent.