麻豆影视

Business

    • EXPLAINER: Chinese builder's debt struggle rattles investors

    A resident wields a cloth dragon outside the Evergrande Yujing Bay residential complex in Beijing, China, Tuesday, Sept. 21, 2021. (AP Photo/Ng Han Guan) A resident wields a cloth dragon outside the Evergrande Yujing Bay residential complex in Beijing, China, Tuesday, Sept. 21, 2021. (AP Photo/Ng Han Guan)
    Share
    BEIJING -

    Global investors are watching nervously as one of China's biggest real estate developers struggles to avoid defaulting on tens of billions of dollars of debt, fueling fears of possible wider shock waves for the financial system.

    Chinese regulators have yet to say what they might do about Evergrande Group. Economists expect Beijing to intervene if Evergrande and lenders can't agree on how to handle its debts. But any official resolution is expected to involve losses for banks and bondholders.

    The government "doesn't want to be seen as engineering a bail out" but is likely to organize a debt restructuring to "reduce systemic risk and contain economic disruption," Tommy Wu of Oxford Economics said in a report.

    Evergrande is the biggest casualty yet from the ruling Communist Party's effort to rein in surging debt levels Beijing sees as a possible threat to the economy.

    Investors are watching how the developer headquartered in the southern city of Shenzhen near Hong Kong handles an interest payment due Thursday on one of its bonds.

    A look at Evergrande and anxiety about its debt troubles:

    WHAT IS EVERGRANDE?

    Evergrande Group, founded in 1996, is one of China's biggest builders of apartments, office towers and shopping malls and one of its biggest private sector conglomerates.

    The company says it has more than 200,000 employees and supports 3.8 million jobs in construction and other industries. Evergrande says it has 1,300 projects in 280 cities and assets worth 2.3 trillion yuan (US$350 billion).

    Evergrande's founder, Xu Jiayin, was China's richest entrepreneur in 2017 with a net worth of US$43 billion, according to the Hurun Report, which follows China's wealthy. He has tumbled down the list as internet industries boomed but still ranked as China's richest real estate developer last year. He also topped Hurun's 2020 list of philanthropists, giving away an estimated 2.8 billion yuan (US$420 million).

    Evergrande has branched out into electric vehicles, theme park development, health clinics, mineral water and other businesses.

    WHAT'S THE IMPACT SO FAR?

    Evergrande's Hong Kong-traded shares have fallen 85 per cent since early 2021. Its bonds are trading at an equally deep discount.

    Xu built Evergrande on borrowed money, possibly even more so than rivals in an industry that depends on debt. As of June 30, Evergrande reported 2 trillion yuan (US$310 billion) of outstanding debts to bondholders, banks, construction contractors and other creditors.

    Of that debt, 240 billion yuan (US$37.3 billion) was due within a year, down 28.5 per cent from the end of 2020 but nearly triple Evergrande's 86.8 billion yuan (US$13.5 billion) in cash holdings, according to a company financial report.

    In early 2021, Evergrande forecast its total annual transaction volume would surpass 2 trillion yuan (US$310 billion). It reported a US$1.4 billion first-half profit but says sales are weakening because news of its cash crunch is making would-be buyers nervous.

    WHY NOW?

    Evergrande was caught out by new limits regulators imposed on real estate-related borrowing as part of the Communist Party's marathon campaign to reduce reliance on debt.

    Economists have been warning China's rising debt is a potential threat for more than a decade. The ruling party has made reducing such financial risks a priority since 2018. But total corporate, government and household borrowing rose to nearly 300 per cent of economic output last year from 270 per cent in 2018. That's unusually high for a middle-income country.

    News reports indicate Evergrande borrowed everywhere it could, including by requiring employees of its construction contractors to buy its debt.

    In 2017, state-owned China Citic Bank in Shenzhen agreed to lend 40 billion yuan (US$6.2 billion) for an Evergrande project only after its executives agreed to invest at least 3 million yuan (US$465,000) each, according to the business news magazine Caixin.

    HOW DOES THIS FIT INTO THE PARTY'S PLANS TO REMAKE THE CHINESE ECONOMY?

    The Communist Party has cracked down on debt as it tries to nurture self-sustaining economic growth based on domestic consumption instead of trade and debt-supported investment.

    It allowed China's first corporate debt default since the 1949 revolution in 2014 as part of efforts to force borrowers and lenders to be more disciplined. Until then, the government had intervened to bail out insolvent borrowers to avoid spooking financial markets. Beijing has gradually allowed more defaults, but none by a debtor as big as Evergrande.

    WHAT ABOUT OTHER REAL ESTATE DEVELOPERS?

    Other major developers such as Vanke Co., state-owned Poly Group and Wanda Group have not reported similar problems. But hundreds of smaller developers have shut down since regulators in 2017 started tightening control over fundraising tactics such as selling apartments before construction begins.

    Chinese residential real estate is regarded as posing little risk to the financial system, however, because most apartments are paid for with cash, not mortgages. That makes a wave of defaults like those in the United States after the 2008 crisis unlikely and easier for banks to manage.

    "Given how bloated China's property developers are, there could be a whole wave of defaults around the corner," but Beijing has resources "to prevent a full-blown Chinese credit crunch," Simon MacAdam of Capital Economics said in a report. "For all its flaws, this is one advantage of having a tightly controlled financial system versus a more free-market system."

    RISK OUTSIDE CHINA?

    Some commentators suggest Evergrande might become China's "Lehman moment," referring to the failure of Wall Street bank Lehman Brothers, a forerunner to the 2008 crisis. But economists say the risk of wider financial market contagion is low.

    "A managed default or even messy collapse of Evergrande would have little global impact beyond some market turbulence," said MacAdam of Capital Economics.

    Evergrande has US$18 billion of outstanding foreign-currency bonds, but much of that is held by Chinese banks and other institutions. Unlike Lehman, whose assets were financial instruments whose prices can swing wildly, Evergrande has 1.4 trillion yuan (US$215 billion) of land and partially completed projects with relatively stable prices.

    In the unlikely event of an outright default, China's banking system has an annual profit of 1.9 trillion yuan and reserves of 5.4 trillion yuan against bad loans, "which could easily absorb the loss," Larry Hu and Xinyu Ji of Macquarie Group said in a report.

    WHAT NEXT?

    Investors are waiting to see what Chinese regulators might do, but analysts say they appear to be focused on protecting home buyers by ensuring apartments already paid for are completed.

    The government has injected money into other insolvent Chinese companies, but economists say Beijing appears determined to avoid doing that with Evergrande.

    In August, Huarong Asset Management Co., Ltd., the biggest of a group of companies created to help resolve bad loans held by state banks, was bailed out by a capital injection from state-owned companies after it lost 102.9 billion yuan (US$15.9 billion) last year.

    In a letter Tuesday to employees, Xu expressed confidence the company will survive.

    "Evergrande will surely get out of the darkest moment as soon as possible," Xu said in the letter marking the traditional Mid-Autumn Festival.

    CTVNews.ca Top Stories

    Two nephews of the beloved Harry R. Hamilton share stories about his life and legacy.

    The union representing some 1,200 dockworkers at the Port of Montreal has overwhelmingly rejected a deal with their employers association.

    Canada

    • A team of tornado experts is heading to Fergus, Ont. after a storm ripped through the area Sunday night.

    • Two nephews of the beloved Harry R. Hamilton share stories about his life and legacy.

    • The union representing some 1,200 dockworkers at the Port of Montreal has overwhelmingly rejected a deal with their employers association.

    • A man who was critically injured in a police-involved shooting in Hamilton late Sunday afternoon has died in hospital, says the province鈥檚 police watchdog.

    World

    Politics

    • Murray Sinclair鈥檚 family members say the late justice and senator has been laid to rest according to his wishes.

    • Prime Minister Justin Trudeau announced voters in Cloverdale鈥擫angley City will pick their next member of Parliament on Dec. 16.

    Health

    Sci-Tech

    Entertainment

    Business

    Lifestyle

    Sports

    Autos

    Local Spotlight

    For the second year in a row, the 鈥楪ift-a-Family鈥 campaign is hoping to make the holidays happier for children and families in need throughout Barrie.

    Some of the most prolific photographers behind CTV Skywatch Pics of the Day use the medium for fun, therapy, and connection.

    A young family from Codroy Valley, N.L., is happy to be on land and resting with their newborn daughter, Miley, after an overwhelming, yet exciting experience at sea.

    As Connor Nijsse prepared to remove some old drywall during his garage renovation, he feared the worst.

    A group of women in Chester, N.S., has been busy on the weekends making quilts 鈥 not for themselves, but for those in need.

    A Vancouver artist whose streetside singing led to a chance encounter with one of the world's biggest musicians is encouraging aspiring performers to try their hand at busking.

    Ten-thousand hand-knit poppies were taken from the Sanctuary Arts Centre and displayed on the fence surrounding the Dartmouth Cenotaph on Monday.

    A Vancouver man is saying goodbye to his nine-to-five and embarking on a road trip from the Canadian Arctic to Antarctica.

    • Thousands of people are expected to gather in downtown Vancouver on Monday to observe the city鈥檚 100th Remembrance Day ceremony.

    • Weather watchers were treated to an exceptionally rare display on Friday evening as rare cloud formations filled Vancouver skies.

    • Toronto is expected to see an economic boost to the tune of nearly $300 million thanks to Taylor Swift鈥檚 upcoming Eras Tour, which will be making a stop in Canada鈥檚 largest city for a six-show run later this month.

    • One man was transported to hospital early Monday morning after a stabbing in the northwest end of the city, Toronto police say.

    • Calgarians will be observing Remembrance Day at a number of different ceremonies across the city, including at the Hangar Flight Museum.

    • A home in the northeast Calgary community of Saddle Ridge was damaged in a fire on Sunday.

    • WEATHER

      WEATHER

      Conditions were warm early Monday and expected to remain that way for most of the day.

    • WATCH LIVE

      WATCH LIVE

      CTVNewsOttawa.ca looks at Remembrance Day ceremonies in Ottawa.

    • After months of controversy surrounding a dog park in Ottawa's west end, a solution has been reached to divide the park in half.

    • With fewer interments and rising maintenance fees, the money for Canada's largest military cemetery will run out in three to four years.

    • The employers association at the Port of Montreal locked out nearly 1,200 longshore workers, bringing a halt to traffic at the port.

    • Though most businesses are expected to be open on Remembrance Day, there are some establishments that will be closed to commemorate the holiday.

    • LIVE @ 10:45 A.M. MT

      LIVE @ 10:45 A.M. MT

      Monday is Remembrance Day, a time to honour armed forces members who have died in the line of duty.

    • WEATHER

      WEATHER

      This is shaping up to be one of the warmest Remembrance Days in the past decade, at least, for temperatures.

    • Maritimers will stop Monday to remember those who have served, and continue to serve, in Canada's armed forces for Remembrance Day.

    • A Cape Breton senior recalls her life in German-occupied France, and her mother鈥檚 death, during the Second World War.

    • Thousand of people gathered at the Menin Gate in the Ypres, Belgium for Monday鈥檚 Remembrance Day Ceremony.

    • Remembrance Day is today, and a number of ceremonies are taking place around the province to honour those who gave their lives to serve our country.

    • A pillar in Canada鈥檚 history was honoured in Winnipeg Sunday afternoon, with thousands showing up to pay tribute to the life and legacy of the late Murray Sinclair.

    • Winnipeg police have identified two men involved in a stabbing incident earlier this week.

    • There will be two ceremonies taking place in Regina for Remembrance Day, hosted by the Royal Canadian Legion.

    • Regina author Valerie Crowther is celebrating the release of her book 鈥榃ar Letters: Linking Lives in the Second World War.鈥

    • It was a somber day at Mosaic Stadium as members of the Saskatchewan Roughriders officially cleaned out their stalls and closed the book on the 2024 season.

    • A team of tornado experts is heading to Fergus, Ont. after a storm ripped through the area Sunday night.

    • People across Canada will pause to reflect Monday at Remembrance Day Ceremonies across the country.

    • Saskatchewan RCMP are searching for a suspect after a man was seriously injured in a farm-related incident in Montreal Lake.

    • It was a somber day at Mosaic Stadium as members of the Saskatchewan Roughriders officially cleaned out their stalls and closed the book on the 2024 season.

    • The Regina Rams claimed the Hardy Cup after a hard fought battle against the Saskatoon Huskies 19-14 on Saturday in the first all Saskatchewan U-Sports western conference final since 2002.

    • The events will start at 10:15 a.m. with a parade that forms up in front of the Delta London Armories, marches east on Dundas Street and turns north onto Waterloo Street to Dufferin Avenue, the west to the Cenotaph.

    • Emergency crews responded to the scene on Road 68/Highway 2 east of Thamesford around 7 p.m.

    • On Friday, the Sarnia Police Service (SPS) received a report of an alleged abduction in the area of Kathleen Avenue and Walnut Avenue.

    • Environment Canada issued a weather alert for Barrie, Collingwood and surrounding areas, alerting residents about the wicked winds that are expected to pick up to 80 kilometres per hour in the afternoon hours.

    • Barrie residents gathered on Monday to honour Canada鈥檚 veterans and pay tribute to those who served and sacrificed for the country.

    • A driver is facing multiple charges after a multi-vehicle collision on Highway 400 early Sunday morning.

    • WATCH LIVE

      WATCH LIVE

      Representatives of the Windsor Veterans Memorial Services Committee, military representatives, wreath bearers, government officials, and members of the public will attend the Cenotaph at City Hall Square for the outdoor service.

    • One person has been arrested after Chatham-Kent Police Service (CKPS) received multiple complaints about an alleged drunk driver.

    • More details have been released about a police investigation at the Ambassador Bridge that connects Windsor, Ont. and Detroit, MI.

    • Environment Canada says heavy rain and winds could cause power outages on Vancouver Island as an "intense" storm system is set to hit the B.C. coast Sunday.

    • Six deer were struck by vehicles in six different locations in a six-hour period on B.C. highways on Saturday, according to the transportation ministry.

    • The union for locked-out port workers in British Columbia says the BC Maritime Employers Association cut off talks in less than an hour Saturday, refusing to budge on a final offer that the union has so far rejected.

    • The emergency department at South Okanagan General Hospital in Oliver, B.C., will be closed for 31 hours this weekend, the second such closure in a week and the third since the start of November.

    • Police in Kamloops, B.C., are reminding parents and guardians to check their children's Halloween candy after receiving a report of a mother finding a razor blade in one of her daughter's treats.

    • More than two years after Alannah Brown and Douglas Barker were found dead north of Penticton, police are asking for help identifying a vehicle they believe was associated with the crime.

    • The Southern Alberta Recreation Association is officially announcing the Town of Taber as next year鈥檚 host for the Southern Alberta Summer Games.

    • The Lethbridge Hurricanes broke open a close game with three goals in the first two minutes of the third period as they defeated the Warriors 7-3 in a game played Friday night in Moose Jaw.

    • There might not a lot snow just yet, but many southern Albertans are still itching to get outdoors.

    • It was just days before the COVID-19 pandemic shut the world down when the Shaft Bottom Boys of Sudbury broke a world record for 'Deepest Concert Underground.' Now, more than four years later, a Timmins band is looking to take the title.

    • Police have arrested a 15-year-old in connection with a break-in and $50,000 in damage done to the Centennial Arena in Elliot Lake in September.

    • Mayors of the five largest cities in northern Ontario met in North Bay the last two days to discuss a range of critical issues impacting their cities and the region.

    N.L.

    Shopping Trends

    The Shopping Trends team is independent of the journalists at 麻豆影视. We may earn a commission when you use our links to shop.聽Read about us.

    Stay Connected
    Follow 麻豆影视