Stocks in mainland China dropped as trading resumed after a two-day holiday as China Evergrande Group’s debt crisis stoked concerns about contagion risks in a slowing economy.
The Shanghai Composite Index fell 0.7 per cent to 3,590.25 in early Wednesday trading. The CSI 300 Index of the biggest companies on the Shanghai and Shenzhen bourses tumbled 0.9 per cent, with sub-gauges of financial and consumer stocks leading the decline.
Hong Kong’s stock market is closed for the Mid-Autumn Festival holiday. The city’s Hang Seng Index retreated 2.8 per cent over the past two days amid a rout in property developers.
“Evergrande’s debt problem has triggered concerns about the stability of private property developers and contagion risks along the industry chain,” said Li Lifeng, a strategist at Huaxi Securities. “The impact on the property market is controllable and chances of a systemic risk are low.”
China Evergrande, which carried more than US$300 billion in liabilities at the end of June, is struggling to meet debt repayment deadlines, triggering worries about potential domino effects in the financial sector amid state or regulatory silence.
The developer said its onshore unit is negotiating a plan to reschedule interest payments due Thursday on local-currency bonds, according to an exchange filing. That came after some media reports said the world’s most indebted developer had already missed the interest payments to at least two big bank creditors.
Other markets in Asia were mixed on Wednesday, with benchmarks in Japan and Taiwan sinking and those in South Korea and Australia advancing before the Federal Reserve open-market meeting with all eyes on its tapering signals.Internet Explorer Channel Network