HONG KONG (Reuters)-China Evergrande’s electric vehicle division plunged as much as 26% on Monday after the company warned that unless cash is injected quickly, it will face uncertainty in the future and said it will not continue to issue shares. plan.
The warning issued by China Evergrande New Energy Automobile Group after the close on Friday is the most obvious sign so far that the liquidity crisis of the troubled real estate developer is worsening in other areas of its business.
The share price of the electric vehicle division fell to HK$1.66 in early trading, and then gave up a decline of 2.2%. China Evergrande’s share price rose 5%, stabilizing near the 10-year low set last week, while Evergrande’s US dollar bonds were at a distressed level.
In the broader market, fears that the failure of Evergrande might trigger a global crisis have faded.
Kyle Rodda, an analyst at Melbourne brokerage IG Markets, said: “I think the market has priced it based on the balance of possibilities, and the shock and awe are over.”
“From now on, the market is really only looking forward to a company that is doomed to fail, but it will not be allowed to cause major risks in China’s financial system – or that (contagion) will not spread to the global market.”
Evergrande missed the payment deadline for US dollar bonds last week, and its silence on the matter has made global investors wonder whether they will have to bear huge losses when the 30-day grace period ends.
Its next major test in the public debt market will take place on September 29, when it will pay $47.5 million in bond interest for its 9.5% USD bond in March 2024.
Evergrande, which has a debt of approximately US$305 billion, is already short of cash and has quickly become Beijing’s biggest corporate headache. Investors worry that the collapse may bring systemic risks to China’s financial system.
The hard-hit developer is scrambling to raise funds to pay for its many lenders and suppliers as it oscillates between a far-reaching chaotic collapse, a managed collapse, or the unlikely prospect of a Beijing bailout.
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