China property stocks tumble on renewed debt fears
Country Garden shares tumbled to fresh eight-month lows Monday, extending losses on renewed debt fears for the Chinese property sector. Future Publishing | Future Publishing | Getty Images
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Country Garden is seen as one of the largest property developers in the mainland. A move last week to refinance part of a 2019 loan facility failed to assure investors of its ability to service its debt, Reuters reported. JP Morgan's analysts slashed target prices for Country Garden by more than 60% to HK$0.90 and Country Garden Services by nearly 70% to HK$6.70. Monday's slide for the Chinese property sector comes after heavy losses last week following weak property-related data and property giant Evergrande's overdue earnings report that showed the full extent of its default. The country's property sector is struggling to emerge from a credit crisis after the government cracked down on its debt levels in August 2020.
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Years of exuberant growth led to the construction of ghost towns where supply outstripped demand, as developers looked to capitalize on the desire for home ownership and property investment. Weakness in China's real estate sector could be a drag on the economy for years to come and could even impact countries in the wider region, Wall Street banks have warned. Goldman Sachs economists said the property market is expected to see an "L-shaped recovery" — defined as steep declines followed by a slow recovery rate.
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Source: CNBC
