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Chinese property stocks surge after Country Garden avoids default

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NANJING, CHINA – AUGUST 18, 2023 – Aerial photo shows a residential area of Evergrande in Nanjing, East China’s Jiangsu province, Aug 18, 2023. (Photo by Costfoto/NurPhoto via Getty Images)

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Shares of Chinese property developer Evergrande jumped over 70% on Wednesday, leading gains on the Hang Seng Index.

The real estate sector was the top gainer on the HSI, but the overall index was still in negative territory, dragged by health-care and industrial stocks.

Other stocks like Country Garden Holdings and Logan Group also surged, gaining 23% and 26% respectively, while the Hang Seng Mainland Property Index was up about 4%.

The gains come after Country Garden reportedly managed to pay $22.5 million in bond coupon payments on Tuesday, narrowing avoiding default.

The bond payments were originally due in August, but Country Garden submitted the payments hours before a 30-day grace period expired.

China’s property sector has languished ever since Evergrande defaulted in 2021. Last week, the stock resumed trading and closed nearly 80% lower in its first session in 17 months. Evergrande shares had closed at 35 Hong Kong cents on Tuesday.

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Other property stocks have also plunged in the past year amid contagion fears. Shares of Country Garden have fallen 53% so far this year while Logan dropped 18%.

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This is breaking news. Please check back for updates.

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