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Evergrande stock price drops sharply on fears that company is running out of money
The share price of the second-biggest property developer in China plunged by nearly 12% on Monday.
This followed Friday’s announcement in which Evergrande warned that it might not have enough money to repay its more than $300bn in debt.
The firm’s shares opened lower, and before long the stock price was down by 10%.
After that, it continued losing steam, and by early afternoon, it was trading nearly 12% lower.
Investors are now concerned that the firm’s woes could have a detrimental impact on international markets.
The company has indicated that it intends to ‘actively engage’ with foreign creditors.
The Guangdong provincial government met with Evergrande’s chairman on Friday night, and afterwards said that it plans to send a working group to the firm to improve internal controls and risk management.
So far, the company hasn’t defaulted on its publicly traded offshore bonds, but investors fear that this can change after Friday’s announcement.
The 30-day grace period for paying interest on two of its bonds that are denominated in USD ends today.
Stock markets in the region reported mixed results on Monday.
In Hong Kong, the Hang Seng traded 1.2% lower by mid-afternoon, with both tech and property stocks losing value.
Alibaba fell by 4.8% after the firm announced that it will overhaul its e-commerce division and replace its CFO.
JD.com has so far slipped 3.1%, and Baidu is trading 4.7% lower.
China’s Shanghai Composite is trading 0.1% lower, and in Japan, the Nikkei 225 has so far lost 0.2% of its value.
Nasdaq futures are down 1.4% after already dropping by 1.9% on Friday.
In South Korea, however, the Kospi is up by 0.3%, and after experiencing losses on Friday, both Dow and S&P futures are now trading 0.6% higher.
In related market news, the contamination has also spread to Australia – in Sydney, the S&P/ASX 500 was trading 0.2% lower on Monday.
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