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As of September 20, Evergrande stock has lost approximately 86%, 84.7%, and 78.89% in the past year, YTD, and three months respectively.
China Evergrande Group (HK: 3333) stock closed the Hong Kong session on Monday, September 20, trading at HK$ 2.280, down 10.24%. The forecasted fall of Evergrande has brought down the Hang Seng index, particularly the futures contract. Moreover, the Chinese market is significantly bolstered by the constitution and real estate industry.
Now analysts fear a possible domino effect sparked by Evergrande’s incoming crisis. According to AllianceBernstein’s Jenny Zeng who spoke to CNBC last week, most developers who account for up to 15% of the global market might not survive the Covid economic restructuring. “In the offshore dollar market, there is a considerable large portion of developers (who) are implied to be highly distressed,” Zeng said. These developers “can’t survive much longer” if the refinancing channel remains shut for a prolonged period, she added.
As Coinspeaker reported on Friday, Evergrande is expected to pay $83.5 million interest on September 23 for its March 2022 bond. Additionally, the company is due to pay another $47.5 million in interest on September 29, 2021, for its March 2024 bond. However, the company will have up to 30 days in grace period before the window to reclaim its lost glory is closed.
Overall, the company is said to have an accumulated debt of $300 billion. Notably, should the company default on subsequent repayments, the banking sector is most likely to get affected hugely.
Evergrande Stock and the Market Outlook
Evergrande stock has, as of September 20, lost approximately 86%, 84.7%, and 78.89% in the past year, YTD, and three months respectively. According to market analytics provided by MarketWatch, Evergrande’s stock has plummeted approximately 47% and 32% in the past one month and five days through Monday. An indication most of the downfall has taken place in the past few weeks.
With a market capitalization of HK$ 33.66 billion, the company faces losing some of the collateral assets used in securing the loans. Consequently, Evergrande’s shareholders both in Mainland China and other international markets have been on a selling spree in the past few weeks and the trend is expected to continue in the coming months. Moreover, prospects of recovering fully are nowhere near in the next decade.
As investors continue to lose faith in the Chinese asset stock market, notable indexes could not help but drop. Notably, the Hang Seng Index Dec 2022 on the Hong Kong Futures Exchange dropped approximately 382 points reciprocating to a drop of 1.56% at the end of the day.