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26% Fall In Stocks Of China Evergrande's Electric Car Unit Following Warning Last Week


09/27/2021


26% Fall In Stocks Of China Evergrande's Electric Car Unit Following Warning Last Week
After it warned last week about it facing an unclear future till such time that it received a quick injection of cash and said that it would not go ahead with its plans for issuing of RMB shares, the stocks of China Evergrande's electric vehicle subsidiary fell by as much as 26 per cent on Monday.
 
China Evergrande New Energy Vehicle Group's warning was issued by it after the closure of the market on Friday and it was the strongest indication yet that the troubled liquidity issues of the Chinese property developer were spreading in other areas of its company.
 
Shares of the electric vehicle unit fell as low as HK$1.66 in early trade prior to staging some recovering to fall 2.2 per cent. China Evergrande's shares climbed 5 per cent to remain at a decade low set last week, while Evergrande dollar bonds remained in difficulty.
 
There has however been a subsidence of fears in the broader markets that a global crisis could be caused by the collapse at Evergrande.
 
"I think the markets have priced in that on the balance of probabilities, the shock and awe is over," said Kyle Rodda, analyst at brokerage IG Markets in Melbourne.
 
"Markets are really just expecting from here on in, a company that is doomed to failure but one which won't be allowed to result in major risks within the Chinese financial system - or that (contagion) won't pervade global markets."
 
A payment on a dollar bond that was dues last week by Evergrande was missed by it , leaving foreign investors wondering if they would have to swallow significant losses when a 30-day grace period expires. more info
 
Its next critical challenge in public debt markets will be on September 29, when it is supposed to be making a bond interest payment of $47.5 million on its 9.5 per cent March 2024 dollar bond.
 
Evergrande is currently struggling financially and has quickly become China's largest business worry, with investors concerned that a failure of the company may pose systemic dangers to China's financial system.
 
The bankrupt developer is racing to obtain cash to pay its numerous creditors and vendors as it teeters on the brink of a dramatic implosion with far-reaching consequences, a controlled collapse, or the less probable option of a rescue from Beijing.
 
(Source:www.aljazeera.com)After it warned last week about it facing an unclear future till such time that it received a quick injection of cash and said that it would not go ahead with its plans for issuing of RMB shares, the stocks of China Evergrande's electric vehicle subsidiary fell by as much as 26 per cent on Monday.
 
China Evergrande New Energy Vehicle Group's warning was issued by it after the closure of the market on Friday and it was the strongest indication yet that the troubled liquidity issues of the Chinese property developer was spreading in other areas of its company.
 
Shares of the electric vehicle unit fell as low as HK$1.66 in early trade prior to staging some recovering to fall 2.2 per cent. China Evergrande's shares climbed 5 per cent to remain at a decade low set last week, while Evergrande dollar bonds remained in difficulty.
 
There has however been subsidence of fears in the broader markets that a global crisis could be caused by the collapse at Evergrande.
 
"I think the markets have priced in that on the balance of probabilities, the shock and awe is over," said Kyle Rodda, analyst at brokerage IG Markets in Melbourne.
 
"Markets are really just expecting from here on in, a company that is doomed to failure but one which won't be allowed to result in major risks within the Chinese financial system - or that (contagion) won't pervade global markets."
 
A payment on a dollar bond that was dues last week by Evergrande was missed by it, leaving foreign investors wondering if they would have to swallow significant losses when a 30-day grace period expires. more info
 
Its next critical challenge in public debt markets will be on September 29, when it is supposed to be making a bond interest payment of $47.5 million on its 9.5 per cent March 2024 dollar bond.
 
Evergrande is currently struggling financially and has quickly become China's largest business worry, with investors concerned that a failure of the company may pose systemic dangers to China's financial system.
 
The bankrupt developer is racing to obtain cash to pay its numerous creditors and vendors as it teeters on the brink of a dramatic implosion with far-reaching consequences, a controlled collapse, or the less probable option of a rescue from Beijing.
 
(Source:www.aljazeera.com)