–
In the shadow of Evergrande, real estate stock Sinic shrivelled on Monday. Out of nowhere.
–
On the Hong Kong stock exchange, most attention went to the real estate mastodon Evergrande, which lost another 10 percent, while the Hang Seng star index lost 3.3 percent. The most impressive price evolution, however, was that of Sinic Holdings Group. That share plunged 87 percent to 0.5 Hong Kong dollar.
–
Sinic, like Evergrande, is a Chinese property developer with headquarters in Beijing. The group has a focus on villas and apartments, but is also active in offices. After the crash, the market value converted to barely 200 million euros.
–
The tumble could have been even greater as Sinic halted trading of the stock during the afternoon. No fewer than 369 million shares changed hands on Monday against a daily average of just over 1 million.
–
The company must repay a $246 million bond on October 18 that carries a coupon of 9.5 percent. There may have been a sudden panic about Sinic’s ability to repay that bond, just as there are major question marks at Evergrande. Last week, the credit rating agency Fitch lowered Sinic’s credit outlook.
–
Margin calls
“Given the nature of the share price movement, I think major shareholders have received margin calls,” an analyst told Bloomberg news agency. With a margin call, an investor is obliged to put extra cash in an account. If that fails, the only option is to sell the shares.
–
Bloomberg contacted Sinic’s Hong Kong headquarters. “There is no one here who has the authority to talk to the media,” he said.
–
–
:watermark(cloudfront-eu-central-1.images.arcpublishing.com/ipmgroup/5IDEBLR7ERC5TMAPLOHS63MVNM.png,0,30,0)/cloudfront-eu-central-1.images.arcpublishing.com/ipmgroup/22OY3LSNBRBH3IIW2JA4GLAHOM.jpg?resize=150%2C150&ssl=1)
