Beijing’s pressure on the real-estate sector is being felt far beyond China Evergrande Group
“Markets should be prepared for what could be a much worse-than-expected growth slowdown, more loan and bond defaults, and potential stock market turmoil,” Mr. Lu wrote, saying that property makes up a quarter of the Chinese economy.
Already the challenges appear to be feeding into financial results across the sector. The median gross-profit margin of Chinese developers tracked byAs of mid-August, developers had defaulted on $6.2 billion of high-yield debt this year, a higher total than the previous dozen years combined, according to Morgan Stanley.
“We haven’t seen such a high level of bad property loans in more than a decade,” said Shujin Chen, a banking analyst with securities firm Jefferies., for instance, nearly 4.3% of property loans were nonperforming at the end of June, up from about 2.3% six months earlier. Property makes up about 7% of all corporate loans at ICBC, China’s biggest commercial bank by market value.
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