Chinese developer Country Garden warns of possible default – Kommersant

Yesterday, August 30, one of the largest Chinese developers in the residential real estate market, Country Garden informedthat in the first half of its losses amounted to 51.5 billion yuan ($7 billion). In addition, the company warned that under certain circumstances “may be unable to service its financial obligations on a number of borrowings, which could lead to default” on them.

Observers notethat the announcement seriously alarmed investors and market participants who recently witnessed the crisis of another major Chinese developer – Evergrande, whose debt obligations amount to $ 328 billion and which experienced a technical default last year. The company had to go through a painful restructuringand last Monday its shares, once again starting traded on the stock exchange after a 17-month break, immediately collapsed in price by 80%.

Country Garden attributed its losses to “the depth and magnitude of the downturn in the Chinese real estate market, especially in smaller Chinese cities” for which it “was not prepared.” The real estate market continues to have a negative impact on the entire Chinese economy. Latest data from National Bureau of Statistics of China showed the continuation of the trend towards a slowdown in the country’s economic growth in July: the growth of industrial production in annual terms slowed down from 4.4% to 3.7%, retail sales – from 3.1% to 2.5%.

Evgeniy Khvostik