A blood red week lies behind the Evergrande group. Events rolled over and the question of whether Evergrande is too big to fall was in the room. Perhaps the specific question should be whether anyone has an interest in felling the group. Because it doesn't look like that at the moment. And if you read between the lines, you discover one or the other interesting detail.
The headwind this week was severe. Some banks refused to finance buyers for Evergrande projects that were not yet fully completed. A court froze funds and government regulators prohibited the sale of two properties. The reason: sale below creation value.
The question of where this development could lead can hardly be answered. What is certain is that the administration wants a leaner group that frees itself from the burden of debt and focuses on its core competencies.
State-run media formulated corresponding. Beijing has asked Evergrande to resolve this crisis as quickly as possible and it seems that additional marks are being set. Evergrande's bonds are under heavy pressure, and this week they were only for sale at high discounts of 50 percent and more. To counter this, the CCXI (Chengxin International Credit Rating) rates the 2023 bonds with AAA, the highest possible value. The decision may irritate observers because the CCXI has the Evergrande Group on its watch list.
Anyone who sees politics behind this will be right. The CCXI was founded in 1992 and is used by China as a political tool against the US rating agencies, which dominate the market.
Tourism business is up for grabs
On Thursday, the Evergrande Group and Guangfa Bank reached an agreement on the dispute that led to the fixing who had led money at the beginning of the week. Also, Evergrande announced the possibility of selling the lucrative Tourism business on. Evergrande is also a heavyweight in China in this regard. 15 theme parks for children and adolescents (Evergrande Faryland) alone are planned from 2023.
This is hard to understand by European standards Evergrande Ocean Flower Project with 58 hotels, various shopping malls and theme parks and 40 kilometers of coastline on 381 hectares. It is located in Hainan Province and was completed in 2020.
The project is said to have cost US $ 24 billion and is only part of Evergrande's thriving tourism business. Selling the tourism unit could be the problem-solving approach for the group.
The exchange reacted immediately. Evergrande (HK 3333) and Evergrande Auto (HK 0708) stocks rose sharply, but gave up gains on Friday and ended the week with blood-red losses.
Billionaire friends of CEO Hui Kay Yan buy
What is interesting is what was not reported on this week. Bottled water and the billion dollar tourism business are on the list of potential sales. Evergrande Auto does not seem to be up for grabs. About the business, which will devour billions before it books the first cent on the account, was silent.
While Evergrande bonds are trading at discounts of almost 50%, billionaire friends are stocking up on that. Asia Orient Holdings Ltd. Hui Kay Yan's friend Poon Jing is said to be dealing with papers worth approximately US $ 1 billion covered to have. Mostly it should be bonds that mature in 2023. Wagering on the bonds is risky but can be highly lucrative.
What is particularly noticeable: It is always the same names that appear around Evergrande that support the company, says Nigel Stevenson, analyst at GMT Research Ltd. in Hong Kong.