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Evergrande crisis
BusinessMarkets

China stocks retreat as Evergrande delays debt repayment while PBOC injects US$18.6 billion into market to calm nerves

  • Mainland stocks resumed trading after a two-day break as crisis at China Evergrande hit trading sentiment
  • Distressed developer has asked to delay interest payment on local-currency bonds due this week, according to an exchange filing

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Contagion risks from Evergrande’s debt crisis unsettle traders as China’s stock market resumes trading after a two-day break. Photo: AFP
Zhang Shidongin Shanghai
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. Losses narrowed after the central bank injected liquidity to calm nerves.
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The CSI 300 Index of the biggest companies on the Shanghai and Shenzhen bourses slid 0.7 per cent on Wednesday, with sub-gauges of financial and consumer stocks leading the decline. The Shanghai Composite Index reversed losses to advance 0.4 per cent.

Hong Kong’s stock market is closed for a public holiday linked to the Mid-Autumn Festival. The city’s Hang Seng Index retreated 2.8 per cent over the past two days amid a rout in local property developers.
The People’s Bank of China injected 120 billion yuan (US$18.6 billion) into the banking system through reverse purchase agreements on Wednesday, partly to prevent the liquidity crunch at Evergrande from reverberating across the financial markets.

An index of financial stocks slumped 1.2 per cent. China Minsheng Banking lost 1.8 per cent to 3.90 yuan, while Ping An Bank and China Everbright Bank tumbled by at least 1.5 per cent. The three lenders have the highest credit risks to the property sector, according to Citigroup.

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“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.”

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