Country Garden, one of the largest property developers in China, recently mentioned that it might not be able to repay its debts on time.
The company that was in a crisis announced that they lost a huge amount of money, $6. 7 billion, during the first six months of this year.
Country Garden said in the statement that it was very sorry for not doing a good job.
This news adds to worries about how the world’s second largest economy will recover after the pandemic.
Country Garden has also said that it did not make the required interest payments on the bonds that were supposed to be paid this month. However, it said that there was still a 30-day period where you could make the payments without any consequences.
It is also said to be trying to get more time to pay back another loan.
The company said that it might not be able to pay back its debts if its financial situation keeps getting worse.
Country Garden said in a statement to regulators in Hong Kong that the group may not be able to meet the financial requirements of these borrowed funds. This could lead to a default on the borrowed money, which may also cause a default on other borrowed funds.
Earlier this month, the company said that it might lose around $7. 6 billion in the first half of this year. The company predicted a loss between 45 billion yuan and 55 billion yuan, and the actual loss was at the lower end of that estimate, at around 45 billion yuan.
Shares of Country Garden were up by approximately 1% during trading in Hong Kong on Thursday morning.
The issues in China’s property market, which involve things like constructing houses and manufacturing the goods used in them, are having a huge effect because it makes up about one-third of the economy.
China’s property industry was shaken up by new regulations in 2020, which limited the borrowing capacity of large real estate companies.
Evergrande, a popular company in China, gathered a debt of over $300 billion. This happened because the company grew quickly and became one of the largest companies in the country.
The company’s money issues have affected the property industry in the country. Other developers have also failed to pay their debts and have abandoned construction projects throughout the country.
During the weekend, Evergrande reported that it lost 33 billion yuan in the first half of the year.
On Monday, the value of its shares dropped by almost 80% when they were traded in Hong Kong for the first time in a year and a half.
The value of Evergrande shares dropped by over 99% in the last three years because the government in Beijing took action against real estate companies.
China is also dealing with other problems, such as slow economic growth, excessive debt in local governments, and very high unemployment among young people.
On Thursday, new information was released showing that activity in China’s factories decreased for the fifth month in a row.
The Purchasing Managers’ Index was 49. 7 in August It got better compared to last month, but it’s still below 50, which means there was a decrease.
Tag: Country Garden Holdings
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Country Garden: Property titans in China suffer record losses
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Chinese real estate company Country Garden issues $7.6 billion loss warning
One of China‘s largest real estate developers, Country Garden, has issued a warning that its first-half losses could reach $7.6 billion (£6 billion).
The announcement is the most recent indication of the serious problems the second-largest economy in the world is having.
China plunged into deflation for the first time in more than two years, according to official data released this week.
Along with a steep decline in exports, youth unemployment has reached an all-time high.
On Friday afternoon, Country Garden Holdings‘ stock fell more than 5% in Hong Kong exchange.
In a statement to the Hong Kong Stock Exchange, Country Garden stated that it “expects to record a net loss ranging from approximately RMB45 billion [$6.24 billion; £4.9 billion] to RMB55 billion for the six months ended 30 June 2023.”
The anticipated deficit contrasts with a $265 million profit at this time last year.
The company added that it has formed a special task group under the leadership of Yang Huiyan, its chairman, to look for measures to revive the company.
The company’s rating was reduced earlier on Thursday by rating agency Moody’s, which highlighted “heightened liquidity and refinancing risks” as its justification.
It happened at a time when China was struggling economically, which has led some to wonder how quickly the country is recovering from the pandemic.
In line with expectations, the nation’s exports declined by a larger-than-expected 14.5% in July compared to the same month last year, while imports decreased by 12.4%.
As a record 11.58 million university graduates are anticipated to enter the job market this year, youth unemployment, which is at an all-time high, is also being keenly studied.
President of the United States Joe Biden stated on Thursday that China’s economic woes are a “ticking time bomb.”
Mr. Biden also stated that “China is in trouble” while highlighting its high unemployment and ageing workforce at a fundraising event in the western state of Utah.
The nation is also addressing issues with the housing market and the soaring local government debt.
Evergrande, formerly China’s largest real estate company, disclosed this month that it lost a combined $81.1 billion in 2021 and 2022.
It happened at the same time that the company, which went into debt default in late 2021, announced to investors its overdue earnings.
Evergrande has been battling debts worth an estimated $300 billion.
The significant losses show how severely the developer was impacted by the Chinese real estate crisis in recent years.
Given that the property sector makes up around a third of China’s GDP and encompasses everything from home construction to the manufacturing of white goods used in them, issues there might have a significant influence on the nation.