From small to large, the construction giants in China are slowly collapsing. On Monday, Sunshine 100 China Holdings Ltd. announced its inability to service its $170 million debt. The Hong Kong-listed company dropped a full 44.1% to start the week and is currently trading at 0.218HKD. YTD, the value of the shares fell by 82.13%. The payment was due on December 5.
China Aoyuan Group Ltd. also failed to settle an outstanding payment last week. Creditors had demanded the group make the $651 million repayments, which the company is unable to meet. China Aoyuan Group shares have also fallen 8.43% today and currently stand at 1.630HKD. YTD, the value of the stock has lost 78.5%.
And then there remains the giant of all Evergrande. Evergrande’s share has already lost 87.2% in value YTD, with a falling trend. At the start of the week, the share already fell by 15%. Investors are eagerly following the drama surrounding Evergrande as the construction giant lurches from one bond payment to the next. Now the next payment is due in the amount of $82.5 million. This payment is due after a 30-day deadline expired on Monday.
Just a matter of time when the collapse occurs?
As the authorities in China are aware of the risk around the construction industry, they are now trying to fix what can be fixed to prevent a system collapse.
Analysts believe that the risk of a system collapse will decrease as they believe that the company is currently undergoing a debt restructuring process. However, it can be assumed that the breakdowns in the Chinese construction industry will soon make themselves felt on an international level. When and how this will look, we have to wait and see. For the moment, China is trying to keep the damage as low as possible to prevent destabilization.