Debt-plagued Chinese real estate developer China Evergrande Group plunged on the Hong Kong stock exchange on Tuesday. The company warned of a continuing significant drop in sales in September.
According to Evergrande, it is also uncertain whether it will sell certain parts to raise money. As a result, the principal developer of real estate projects again warned that it might not be able to meet its financial obligations.
Evergrande plunged 11 percent to its lowest level in six years. The company has already lost nearly 80 percent of its market value this year due to the threat of default. In addition, the company is struggling with a gigantic mountain of debt. As a result, it is in a vicious circle in which it does not have enough money to complete its projects and is also unable to generate revenue from sales.
China Evergrande New Energy Vehicle and Evergrande Property Services, the parts the company is trying to sell, lost 22 and 10 percent. Should Evergrande fall, it will likely have significant consequences for the entire Chinese real estate market.
Despite the fall of Evergrande, the Hang Seng index in Hong Kong limited the loss to 0.3 percent. The Chinese tech companies showed a mixed picture after the sharp price losses a day earlier. Internet group Tencent remained virtually unchanged, and online store group Alibaba fell 1.1 percent. The Shanghai stock exchange was down 0.5 percent in the meantime.
In Tokyo, the Nikkei continued its advance and ended 0.7 percent in the plus at 30,670.10 points. Japan’s leading index has been on the rise since the announced departure of Prime Minister Yoshihide Suga, reaching its highest level since August 1990.
Insurance companies led the pack with gains reaching nearly 3 percent. Oil producers also did well, thanks to the recovery in oil prices. The container carriers were also among the strongest climbers due to the hope of a solid economic recovery from the corona crisis.