Thu, 30 Nov 2023

BEIJING, China: Country Garden, one of China's largest property developers, which has witnessed a sharp fall in the value of its shares and bonds, capped a turbulent week for the country's struggling property sector.

The company's Hong Kong-listed shares dropped more than 5 percent and its bonds closed to record lows late last year, after it moved to refinance part of a 2019 loan agreement.

Country Garden has thousands of projects in nearly 300 Chinese cities.

Raymond Cheng, head of China research at CGS-CIMB Securities, said the company's issues was part of the broader problem with Beijing's approach to the crisis.

"If sales do not improve, people will worry about the repayment ability for developers like Country Garden, who have large exposure in smaller cities," Cheng said, as quoted by Reuters.

"Country Garden is a top developer, in terms of sales. If it defaulted it would send a very bad signal to the market that the central government does not care about more developers going down and has no plan to bail it out," he added.

China's property sector, which previously accounted for some 25 percent of China's economic output, has been on a downward trend that intensified during the COVID-19 pandemic, with home sales declining sharply and the government acting against unsustainable borrowing built up during a decade-long building boom.

Other high-profile China property firms currently stugglinng with debt are Dalian Wanda Group and state-backed Sino-Ocean, which have been hit by major ratings downgrades and seen sizable sell-offs this week.

The worst may not be over for the sector, which is facing an estimated $12.8 billion in dollar-denominated bond repayments before the end of the year, said analysts at ANZ.

"New measures, while helpful, are no panacea for the sector's woes. Other efforts are needed to boost buyers' sentiment about the long-term trajectory of the property market," ANZ added.

The troubles at Country Garden are adding to the pressure on the Chinese government to provide additional support to the property sector.

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