MALE: The Maldives began voting Saturday (Sep 30) to decide their next president in a referendum on whether to hitch their fortunes to China or India, both vying for influence in the tropical paradise. Ibrahim Mohamed Solih, 61, faces an uphill battle to secure a second mandate after a termContinue Reading
Getty ImagesHui Ka Yan, the founder and chairman of Chinese property giant Evergrande, was once Asia’s richest person.
The 64-year-old, who is also known as Xu Jiayin, rose from a humble upbringing to head a vast business empire. His fortune was estimated at $42.5bn (£34.8bn) when he topped the list of Asia’s wealthiest people compiled by Forbes magazine in 2017.
Now he is being investigated over suspected “illegal crimes” as his company teeters under the weight of $300bn (£245.4bn) of debt.
Born into a poor rural family in 1958, his early childhood was shaped by the Great Leap Forward – Mao Zedong’s campaign to rapidly industrialise a Chinese economy reliant on agriculture triggered a famine that killed millions.
Mr Hui was raised by his grandmother in a village in central Henan province after his mother died of sepsis when he was just eight months old.
After graduating from university in 1982, he spent the next decade working as a steel technician before becoming a salesman for a property developer in the city of Guangzhou in southern China. It was there that he founded Evergrande in 1996.
The company expanded rapidly as China’s economy boomed by borrowing large amounts of money.
“He was an example of how anybody can become rich if you’re smart enough and if you work hard enough,” said Alicia Garcia Herrero, the chief economist for Asia-Pacific at French investment bank Natixis.
Mr Hui, who has been a Communist Party member for more than three decades, was elected in 2008 as a member of the Chinese People’s Political Consultative Conference. The elite group of government officials and business leaders is the country’s top advisory body.
A photograph of him at a party conference wearing a gold-buckled belt made by the French luxury label Hermès went viral on social media in 2012, earning him the nickname “belt brother”.
A rapidly expanding Evergrande raised $9bn in its 2009 Hong Kong stock market listing.
That growth was then turbo-charged by by Mr Hui’s “maximum leverage” approach, according to Jackson Chan from financial markets research platform Bondsupermart.
“Evergrande grew fast but even faster after he [Mr Hui] made friends with a group of [the] richest real estate tycoons in Hong Kong and the company was listed on Hong Kong Stock Exchange,” Mr Chan says.
“He received numerous support from these friends as they bought a lot of Evergrande’s stocks and bonds to help the company grow.”
Evergrande’s business model was to borrow large sums and then aggressively sell apartments that had not even been built. The group’s real estate unit currently has more than 1,300 projects in more than 280 cities in the country, according to its website.
Mr Hui’s business empire grew to encompass far more than just property and now includes operations including wealth management, electric car making and food and drink manufacturing.
It also has a majority stake in what was once China’s top football team, Guangzhou football club.
In 2020, Beijing brought in new rules to control the amount of money owed by big real estate developers.
The new measures led Evergrande to offer its properties at major discounts in an attempt to keep the business afloat. But it is now struggling to pay its debts.
The crisis has seen its stock market valuation shrink by 99% and Mr Hui’s fortune plummet to $3.2bn.
Evergrande suspended trading of its shares in Hong Kong as Mr Hui became the latest Chinese billionaire to find himself being investigated by authorities.
Some experts see a link between China’s wealthy elite coming under official scrutiny and President Xi Jinping’s Common Prosperity policy, which aims to reduce income inequality.
Mr Hui is “the symbol of extreme wealth especially with his flamboyant lifestyle, flying around the world in his private jet,” Dexter Roberts, Director of China affairs at the Mansfield Center at the University of Montana, told the BBC.
“Xi has made it clear that extreme wealth, especially when displayed publicly like Hui, isn’t good for the economy and the society,” Mr Roberts said, adding that Mr Hui was “seen as a natural target”.
Although there has been no official statement yet on the investigation of Mr Hui, an opinion piece in the state-run Global Times newspaper indicated that the interests of ordinary citizens were being prioritised.
“Minimising homebuyers’ losses at all costs should be the next biggest consideration in dealing with the Evergrande crisis,” Hu Xijin, the paper’s former chief editor wrote.
“We should deal with the matter strictly and in accordance with the law, keep the public informed, and look at how to support the company’s customers as much as possible,” he added.
Financial bookmarks can be very illuminating in assessing a market’s readiness for global primetime. Such is the case with JPMorgan Chase & Co adding Indian debt to its emerging market indices.
The Wall Street icon plans to do just that in June 2024, perhaps drawing US$40 billion into South Asia’s biggest economy – and at a moment when investors are buzzing that India is a ready alternative to a slowing China.
Perhaps most interesting, though, is that India will enter JPMorgan’s benchmark just days after Prime Minister Narendra Modi reaches his 10-year mark in power. On May 26, 2014, Modi’s Bharatiya Janata Party returned to power with a bold economic reform agenda.
The question, nearly a decade on, is whether the Modi era has whipped India into shape as a more innovative, productive and prosperous investment destination. And it’s here where investors rushing India’s way may be more disappointed than fulfilled.
In the Modi era, India is really a tale of two economies. The macroeconomy is going gangbusters with its China-beating growth rate and stampede of tech “unicorn” startups juicing the stock market. At the micro level, though, India is more cautionary tale than emerging-market exemplar.
At the BRICS summit in New Delhi earlier this month, Modi declared that “soon, India will become a US$5 trillion economy.” That would make India’s economy bigger than Japan’s.
And clearly, India is winning friends in high places. As JPMorgan Chase CEO Jamie Dimon views it, the surge in optimism on India is warranted.
Speaking at a forum in London this week, Dimon said: “Look at this conference. I remember eight years ago or nine years ago we started with 50 or 75 clients. Now it’s 700 investors around the world, 100 companies presenting. I think the optimism of India is actually completely justified.”
Morgan Stanley strategist Min Dai notes that its inclusion in indices like JPMorgan’s “could be a push factor to prompt foreign inflows into India and foreign investors are likely to be more active in the Indian fixed-income market.” This is, he says, a “milestone event.”
Economist Robert Carnell at ING Bank says “It remains to be seen whether the JPMorgan decision will spur others, such as the FTSE Russell to follow suit. Either way, as well as supporting the Indian rupee, the decision should also help to reduce government bond spreads over US Treasuries, and also pass through into lower corporate bond rates.”
Not surprisingly, Modi is working overtime to capitalize on this India-rising optimism by seeking to lure multinational companies disillusioned with China. The recent move by Beijing to order employees at some state-linked firms to cease using Apple’s iPhones has been a gift to Modi’s commerce ministry.
India, meanwhile, grew a China-topping 6.1% in the three months ended March year on year. Asia’s third-biggest economy grew an even more impressive 7.2% for the fiscal year through March as its post-pandemic recovery drove consumption.
As China becomes more isolated amid “de-risking” and “decoupling” calls, and Washington and its allies in Asia seek a new emerging-market growth champion, Modi’s $3.4 trillion economy is keen to step up.
This year, the International Monetary Fund sees India contributing more than 15% of global growth. While still less than half of China’s 35%, India’s global clout is clearly growing.
As Modi was happy to highlight at the BRICS — Brazil, Russia, India, China, South Africa — summit, India finds itself in something of a geopolitical sweet spot just as Global South nations come into their own. This gives Modi a unique degree of leverage to play China’s interests against America’s.
This, just as India surpasses China to become the most populous nation, a reminder that Modi’s demographics are healthier than Xi’s. China’s Communist Party is grappling with record youth unemployment, reported as high as 21% until authorities banned future readouts on the figure.
But India’s outlook also depends on Team Modi making the most of India’s so-called “demographic dividend.” If New Delhi doesn’t create enough good-paying jobs, it will face a demographic nightmare rather than daydream.
It’s here where India’s micro policies lag the heady exuberance at the macro level. Look no further than the lack of confidence among currency traders selling the rupee. India’s inflation troubles and the government’s shaky fiscal position have rupee trends defying economists’ optimism.
“Foreign investors have poured $16 billion into equities this year, viewing India as a haven amid rising US rates and economic stresses in China,” notes analyst Udith Sikand at Gavekal Research.
“They have been well rewarded, with stock markets hitting record highs. But the prospect of a weaker rupee, in addition to the outlook for elevated global interest rates, makes the risk-reward proposition on Indian equities less favorable in coming months,” Sikand says.
True, Sikand adds, the inclusion of Indian government debt in JPMorgan’s benchmark index “should prove a watershed event, turbocharged by investors’ need to find alternatives to China.” He adds that India’s “bond market is both deep enough to absorb much larger flows and remains largely untapped.”
Yet “the flip side of greater foreign participation in domestic bond markets is that policymakers will have less room to maneuver, particularly as the twin deficits widen,” Sikand says.
“Still, as long as the Modi government does not give in to its populist instincts in the run-up to elections next year, bond yields are likely to fall as investors look to front-run the expected flood of passive inflows.”
It’s a big “if,” though. Another worry: India’s infrastructure and competitiveness in manufacturing lag China’s by magnitudes that are impossible to dismiss.
Modi’s ambitious “Make in India” push has only increased the flow of Chinese imports, leading to a marked deterioration in New Delhi’s trade balance. Along with rubbing currency traders the wrong way, this dynamic complicates hopes that multinationals might shift supply chains India’s way.
Other warning signs include rising inequality, partly thanks to Covid-19 fallout and inflation running at 15-year highs. Kunal Kundu at Societe Generale speaks for many economists in cautioning that “consumer fatigue” could soon cause giant headwinds.
Modi’s decade in power hasn’t sufficiently addressed many of the challenges he pledged to tackle in 2014. They include poor infrastructure, inequality, chronic youth unemployment, high levels of private debt, a deterioration in balance of payments dynamics and underwhelming household demand.
This has opposition parties ready to pounce. At least two dozen minority parties are joining forces to sideline Modinomics in favor of a more inclusive model. Along with inflation, opposition forces are drawing attention to worsening religious violence and assaults on press freedom.
Here, it’s worth considering another worrisome bookend: the number 85. This is India’s current ranking in Transparency International’s corruption perceptions index.
It’s the exact same ranking India achieved in 2014 — and fully 20 rungs behind 65th-ranked China. So, while Modi’s tenure hasn’t unleashed a bull market in graft, it hasn’t been a golden era for good governance either.
That helps explain why nearly a decade after Modi took national power S&P Global still rates India just one notch above junk at BBB.
Modi’s appeal, of course, derived from the folk-hero reputation he cultivated during his 13-year stint running the western state of Gujarat. From 2001 to 2014, Modi’s local government routinely generated faster gross domestic product (GDP) rates than the national average.
Gujarat often also boasted greater productivity and innovation, less bureaucracy, better infrastructure and lower levels of corruption. A major reason why voters returned the BJP to power in 2014 was in the hope that Modi would replicate the “Gujarat model” nationwide.
Modi’s team did put some early wins on the scoreboard. It opened some key sectors to increased overseas investment, including aviation and defense. It implemented a national goods-and-services tax. It projected a sense of confidence as a startup boom put India in headlines for all the right reasons.
Yet Modi has often read more from the playbook of Shinzo Abe than Margaret Thatcher or Ronald Reagan.
In 2012, Japanese Prime Minister Abe took power pledging epochal reforms, channeling the supply-side revolutions that Thatcher unleashed on the UK and Reagan on the US.
Abe did manage to improve corporate governance. That, over time, drove the Nikkei Stock Average to 30-year highs. Mostly, though, Abe relied on hyper-aggressive Bank of Japan easing to revive growth. This trickle-down economics scheme failed to boost wages or rekindle innovation.
The parallels between Abenomics and Modinomics are clear enough. In certain ways, though, the Modi era in India has been far more damaging than Abe’s 1980s-influenced economic exploits.
Take India’s press freedom score, which has plunged precipitously. In 2014, its 140th ranking out of 180 nations on Reporters Without Borders’ tables was poor enough. Today India ranks 161st, trailing Cambodia by 14 rungs and 11 behind Pakistan.
If Team Modi were serious about reducing opacity and leveling playing fields, it would embrace a free-wheeling press as an ally in raising India’s competitive game. The Modi era has dragged India in the other direction.
Making this dynamic all the more awkward: this year’s scandal involving the Adani Group, led by billionaire Gautam Adani, whose alleged close ties to Modi date back to their Gujarat days.
Short seller Hindenburg Research accused the conglomerate of “brazen stock manipulation and accounting fraud,” spotlighting cracks in India’s financial sector.
In February, billionaire George Soros exacerbated the storm by saying that the Adani crisis “will significantly weaken” Modi’s “stranglehold” on New Delhi politics. In Soros’ telling, Modi and Adani are “close allies” with “intertwined” fates.
BJP officials pushed back, arguing that Soros has “now declared his ill intentions to intervene in the democratic processes” in India.
Weak corporate governance is raising concerns about the health of India’s business environment. It also collides with Modi-era efforts to spotlight India’s giant industrial conglomerates, many of which might not be ready for global primetime.
Another bookmark worth noting: In the latest financial year, foreign direct investment inflows fell for the first time in a decade. The 16% drop to $71 billion would seem at odds with a booming economy winning new converts around the globe as the new China.
It speaks to the need for Modi’s team to accelerate efforts to increase domestic and international competition, build trust in New Delhi’s regulatory institutions, scrap policies that support national champions and curb protectionist impulses.
If his “Make in India” strategy is to gain traction, Modi must rethink tariffs on foreign components. Though intended to advantage domestic supply chains, the protectionist policy dents India’s argument that it’s open for business.
Modi’s government must also invest more in human capital. One in five of India’s 1.4 billion people is under 25. Increased funding must go toward improving financial literacy, education and training. Modi’s team must delve into the economic effects of societal norms.
In a March report, the Organization for Economic Cooperation and Development argued that “in South Asia hundreds of millions of people – not just in India – are affected by caste-discrimination. Caste systems divide people into unequal and hierarchical social groups. Those at the bottom of hierarchy are considered lesser human beings. In the business and work-sphere caste-discrimination affects workers.”
To be sure, Modi has racked up some notable victories, notes analyst Alexis Serfaty at the Eurasia Group consultancy. He says that “India’s policy ecosystem seems to have finally found the right mix to enable rapid manufacturing growth.” Powered by broader geopolitical trends” and Modi government policies, “electronics manufacturing has grown 275% over the past eight years.”
But “while the overarching policy environment at both the central and state levels is realigning toward enabling export-led manufacturing growth, industry executives are still concerned about long-term policy stability, given India’s checkered history,” Serfaty says.
“The Modi government has assured investors that it has the political capital, and the policy will stay the course. Still, realigning bureaucratic behavior and state-level political views to support long-term growth will pose a big challenge in the medium term,” he adds.
And for global investors about to pour $40 billion into Indian debt, a reminder that Modinomics hasn’t transformed the economy as much as hoped and as much as needed to be the new China.
Follow William Pesek on X, formerly known as Twitter, at @William Pesek
Now that the writers’ strike in the US is over, I can pitch my script for that blockbuster version of Cervantes’ classic crying out to be made: Don Quixote in the White House, updating windmills to stray weather balloons, complete with paranoia and mustache-twirling villains.
(Oh. Democrats don’t do facial hair?) I’ll be putting the donkey into Don Quixote. Maybe work in a nice tune. Hey, Madonna can sing the theme song, give Ted Nugent a break.
We got a red-hot A story – the trials and tribulations of Don Quixote, our hero in his sunset years running the world, getting into scrapes, his mentis not quite as compos as it should be.
He’s an elderly, forgetful, stumbling protagonist, just like the original Don. No, not that one (he’s busy right now – more trial than tribulation), I mean DQ, the lovable old guy from the story.
Character flaws? Plenty. Regrets? He has a few. But then again, too few for the press to mention. A man of mystery, there’s a touch of of something untoward in the background keeping us hooked. Did he? Didn’t he? Loves his family. A fool for his reprobate son who, in a hilarious reversal of everything else in his eyes, he sees with a glowy halo and angel wings. Did I mention character flaws?
The B-story is a light romance set in the world’s seat of power. He loves Xi but the sweethearts fall out over a misunderstanding that Xi wants to ditch him and run off with Europe. We open with DQ defending his squeeze: “China is going to eat our lunch? C’mon, man.” Just to show he was lucid once so mebbe, the movie promises, we can get him there again.
What’s at stake? Only the survival of the entire world.
After he falls for this comical misapprehension, the rest of the movie is spent struggling to restore equilibrium against a spiral of decline. The A and B stories intersect and turn each other in a rising crescendo of mistake after mishap after disaster until they come together at the end, the problem resolved in an explosive payoff – Ka-boom!– and we all live happily in the hereafter.
Ker-ching!
At the start, a choir is telling him, “Now play nice.” OK, they’re minor characters: we kill them off in a car crash in Act One. The other, the devil in his ear, is dragging him to hell in a handcart – we’ll give that one a British accent.
Heh! He commits a series of boo-boos so comically absurd, they’ll have the audience in stitches. Literally. Crimea river and pass the cookies.
With all this screaming hysteria going on, this is where the weather balloon comes in. We know it’s innocent. Xi knows it’s innocent. Senior American General Milley knows it’s innocent and says so, loudly and several times. But still DQ shoots it down. “No, don’t, baby, you’ll only look silly,” Xi pleads with him but, Grrr, he sets his Raptors on to it and shoots that bad boy down.
As if that’s not enough, there are two massive snakes he has to fight in an exciting sequence of subterfuge, sabotage and derring-do. Actually, they’re only oil pipelines, not the mythical serpents of his imagination. Being the gentleman that he is, though, he won’t take credit for decapitating them but pushes Sancho Panza up front to take a bow.
Is it a misunderstanding? Senility? An over-eagerness to grab his former love’s attention? Who knows? Soon, every bozo is jumping on the spy-balloon bandwagon, radiating in intensifying circles of comic horror tragedy.
Across the world, every two-bit, dime-a-dozen demagogue, any politician or public figure in need of a reputation cleanser or booster realizes they can play the China “Get out of jail free” card, ready made for every grade ‘n’ shade of no-goodniks.
In Great Britain, there’s fun-and-frolics in deflecting their flaming nosedive on to China. “Human rights” is the watchword for the biggest Empire ever (except for the US). Reds in the bed, spies in Parliament, no charges in court.
They ban Chinese teachers, replacing them with Taiwanese teachers who don’t have Mandarin as first language, because “spying.” In a call-back to Freedom Fries, they’re only allowed to teach Democracy Mandarin. Ho fun noodles are now no-fun noodles because everything Chinese is a spy. And Britain should know. As the longest-lived, oldest spy network in history, they wrote the book.
Not just Johnny English. All DQ’s little friends get in on the act. Nazis in Parliament? The Russians made us do it. Running away with tech? The Chinese stole our IP. A $33 trillion debt? It’s China that’s collapsing.
So, after promising his lost love, “No, honey, I don’t want to contain you. Let your spirit run wild, fly free,” we realize what he really wants is to put a leash and a muzzle on her and take her for walks.
The DQ gets a catch-phrase: “Not on my watch.” Or “Oh, no, better not let peace break out.” Or how about, “Xi’s a dictator.” Or is that too bitter?
We’ve established him as likable, and earned him sympathy by making him good at his job. OK, he fails at that, but he tries – a goldmine of comic relief. As his inner motivation changes places with his outer skin, transforming him into the villain, we recognize the human dilemma: that we are all a seething mess of contradictions and confusion. Especially him! Big Reveal: he was his own antagonist all along!
So: we need an actor who can capture the full range of his complexity.
I was thinking Chuck.
No, “cold, dead fingers” Chuck. Heston. Ben Hur. Remind me of the doll when we cast the sequel.
Waddya mean Chuck’s dead? He’s playing the president – how will they tell?
If we strapped Chuck as Dead El Cid to the back of a charging steed and slapped it into the battlefront, we can do that with Chuck as DQ. CGI is your friend.
Too far-fetched? Nah! Art imitates Life imitates centuries of Art and eons of BS.
What the audience comes to realize at the end is, this is the movies. It’s all projection.
This script is perfect – who can we get to rewrite it?
PUBLISHED : 28 Sep 2023 at 12:27
A woman, who had opened a mule bank account for a scam gang linked to a family tragedy in Samut Prakan in August, was arrested at the Aranyaprathet immigration checkpoint in Sa Kaeo upon her return from Cambodia on Wednesday afternoon.has been arrested at Aranyaprathet immigration checkpoint in Sa Kaeo after she returned from Cambodia.
Immigration investigators, local police and paramilitary rangers arrested Jirapinya Naeyued, 22, at the inbound passenger terminal shortly after crossing the border through Ban Khlong Luk checkpoint from Cambodia’s Poipet town, Pol Col Rung Thongmon, chief of Sa Kaeo immigration police, said on Thursday morning.
The arrest followed information that a suspect who had opened a mule bank account for a scam gang linked to a tragic incident in Samut Prakan, where three family members were murdered, was returning to Thailand through Ban Khlong Luk checkpoint. The suspect had been involved with the scam gang operating in Poipet.
Ms Jirapinya was wanted under an arrest warrant issued by the Samut Prakan provincial court on charges of collusion in fraud, inputting false information into a computer system that caused damage to people and participating in transnational criminal activities.
During questioning, the woman admitted to being the individual named in the arrest warrant. She was initially detained by immigration officers before being handed over to Bang Kaeo police in Samut Prakan for further legal proceedings.
Earlier, deputy national police chief Pol Gen Surachate Hakparn said the scam gang was responsible for a family tragedy in Samut Prakan. In this incident, a man killed his wife and two sons at their home in Bang Phli district on Aug 28. The man, devastated after his wife fell victim to the gang and incurred a substantial debt, unsuccessfully attempted to take his own life.
On Aug 29, another woman, who opened a bank account for the same scam gang, was arrested as she returned to Thailand from Cambodia through a border checkpoint in Sa Kaeo.
Earlier this month, four Thai people, including three women, were arrested in Poipet for allegedly making the scam calls that resulted in the family tragedy in Samut Prakan.
Another arrested in scam in connection with Samut Prakan family tragedy
PUBLISHED : 28 Sep 2023 at 12:27
A woman, who had opened a mule bank account for a scam gang linked to a family tragedy in Samut Prakan in August, was arrested at the Aranyaprathet immigration checkpoint in Sa Kaeo upon her return from Cambodia on Wednesday afternoon.
Immigration investigators, local police and paramilitary rangers arrested Jirapinya Naeyued, 22, at the inbound passenger terminal shortly after crossing the border through Ban Khlong Luk checkpoint from Cambodia’s Poipet town, Pol Col Rung Thongmon, chief of Sa Kaeo immigration police, said on Thursday morning.
The arrest followed information that a suspect who had opened a mule bank account for a scam gang linked to a tragic incident in Samut Prakan, where three family members were murdered, was returning to Thailand through Ban Khlong Luk checkpoint. The suspect had been involved with the scam gang operating in Poipet.
Ms Jirapinya was wanted under an arrest warrant issued by the Samut Prakan provincial court on charges of collusion in fraud, inputting false information into a computer system that caused damage to people and participating in transnational criminal activities.
During questioning, the woman admitted to being the individual named in the arrest warrant. She was initially detained by immigration officers before being handed over to Bang Kaeo police in Samut Prakan for further legal proceedings.
Earlier, deputy national police chief Pol Gen Surachate Hakparn said the scam gang was responsible for a family tragedy in Samut Prakan. In this incident, a man killed his wife and two sons at their home in Bang Phli district on Aug 28. The man, devastated after his wife fell victim to the gang and incurred a substantial debt, unsuccessfully attempted to take his own life.
On Aug 29, another woman, who opened a bank account for the same scam gang, was arrested as she returned to Thailand from Cambodia through a border checkpoint in Sa Kaeo.
Earlier this month, four Thai people, including three women, were arrested in Poipet for allegedly making the scam calls that resulted in the family tragedy in Samut Prakan.
Solih won office in 2018 on the back of discontent with his autocratic predecessor Abdullah Yameen, an ally of Muizzu’s who is now serving an 11-year prison sentence for corruption. He had accused Yameen of pushing the country into a Chinese debt trap by borrowing heavily for infrastructure. Yameen’s turnContinue Reading
ReutersShares in crisis-hit Chinese property giant Evergrande have been suspended in Hong Kong amid reports its chairman has been placed under police surveillance.
It follows reports earlier this week that other current and former executives had also been detained.
Thursday’s market statement did not give a reason for the trading halt.
But it marks another low for the heavily indebted property giant which defaulted in 2021, triggering China’s current real estate market crisis.
In August, the firm filed for bankruptcy in New York, in a bid to protect its US assets as it worked on a multi-billion dollar deal with creditors.
The market trading halt now comes just a month after the firm’s previous 17-month suspension was lifted.
Evergrande – once valued as the world’s most valuable property developer – is at the centre of a real estate crisis threatening the world’s second largest economy.
With more than $300bn (£247bn) of debt, the firm has been scrambling to raise cash by selling assets and shares to repay suppliers and creditors.
Most of Evergrande’s debt is owed to people within China, many of whom are ordinary citizens whose homes have not been finished.
When the firm defaulted on its huge debts in 2021, it sent shockwaves through global financial markets as the property sector contributes to roughly a quarter of China’s economy.
Several other of the country’s major developers have defaulted over the past year and many are struggling to find the money to complete developments.
In July, Evergrande revealed it had lost a combined 581.9bn yuan ($79.6bn; £65.6bn) over the post two years.
It has been working on a new repayment plan and the company seemed to have been moving closer to resolving the problem after it filed for US bankruptcy protection.
Its latest plan was to reissue its overseas debt as new bonds that it had to pay back in about 10 years’ time, as well as offering their creditors stakes in the company as shares.
But earlier this week, Evergrande revealed its mainland unit Hengda Real Estate had defaulted on 4 billion yuan (£449m; $547m) of debt.
Chinese business wire Caixin also reported that several current and former executives has been detained.
Then on Wednesday, Bloomberg News reported the firm’s founder Hui Ka Yan, who is also known as Xu Jiayin, had bene taken away by police this month and was being monitored at a designated location.
The BBC has been unable to independently confirm Bloomberg’s reporting.
Trading in its two other units – the property services and electric vehicle – was also suspended on Thursday.
“China’s property-sector stress will continue to pose cross-sector credit risks in the near term,” wrote Lan Wang and Duncan Innes-Ker of Fitch Ratings.
“The government’s modest policy easing to date is unlikely to drive a sharp turnaround in homebuyers’ sentiment, even though it has led to some recent improvements in broader economic indicators,” their report said.
HONG KONG: Trading in shares of China Evergrande were suspended on Thursday (Sep 28) after a report its chairman had been placed under police surveillance, intensifying concerns over the developer’s future as it struggles with a growing threat of liquidation. On Wednesday, Bloomberg News reported that Hui Ka Yan, whoContinue Reading
Worries that Evergrande Group will go bankrupt have intensified with news that the indebted property developer’s chairman, Hui Ka-yan, is under police surveillance.
Hui was taken away by Chinese police earlier this month and is being monitored at a designated location, Bloomberg reported, citing people familiar with the situation.
The report said the billionaire is under residential surveillance but it does not mean he will be charged with a crime.
Now that offshore creditor meetings originally scheduled on Monday and Tuesday were canceled, Evergrande must submit a new debt revamp plan by October 30 or its bondholders’ group will support a winding-up petition already filed against the developer, Reuters reported on Tuesday.
Shares of Evergrande have lost 42% so far this week. Shares of Country Garden and Sunac, which followed in Evergrande’s footsteps to file for bankruptcy protection in the United States, have dropped 14.3% and 20.5%, respectively.
Bankruptcy protection is a preliminary move that gives the debtor time to devise a restructuring plan and seek creditors’ approval of it. Full-out bankruptcy would mean winding up the company.
Some commentators say it’s likely not only that the once-largest property developer will go bankrupt but also that its collapse will hurt homebuyers’ confidence and create instability in the financial systems.
Since the announcement of a debt restructuring plan on March 22, sales have been worse than expected, the company said in a filing to the Hong Kong stock exchange on September 22.
Based on its current situation and consultations with its advisors and creditors, the company said, it’s necessary to re-assess the terms of the proposed restructuring plan.
Evergrande said Sunday that it is unable to meet the qualifications for the issuance of new notes under the present circumstances as its Shenzhen-listed subsidiary Hengda Real Estate Group is being probed.
In fact, Hengda Real Estate had already said on August 16 that it was being investigated by the Chinese Securities Regulatory Commission (CSRC) for suspected violation of information disclosure regulations.
It was on August 17 that Evergrande filed for bankruptcy protection to the Manhattan bankruptcy court, seeking recognition of restructuring talks underway in Hong Kong, the Cayman Islands and the British Virgin Islands.
Noting that date, Zhang Yinyin, a Shanghai-based columnist, writes in an article that when Evergrande said on August 16 that Hengda Real Estate was being probed, it already knew that its proposed debt restructuring plan would fail.
“It does not make sense to blame ‘worse-than-expected sales’ for the cancellation of the offshore creditor meeting,” Zhang says. “It would be strange if an indebted developer had strong sales.”
Zhang says that, even if its subsidiaries and executives were not being probed, it would be very difficult to restructure the debts of Evergrande – which has a liability of 2.4 trillion yuan (US$329 billion) and a need to raise another 200 to 300 billion yuan.
Yang Shih-kuang, a Taiwanese commentator, said in a TV program on Monday that Beijing’s recent move to reduce capital outflow has also become a new obstacle for Evergrande to pay its offshore creditors and implement its debt restructuring plan.
Yang said that, from Beijing’s perspective, indebted property developers’ top mission is to ensure the delivery of apartments to homebuyers.
Citing three sources, Reuters reported on September 11 that the PBoC is tightening its scrutiny of bulk dollar purchases by domestic firms amid a weakening renminbi. Companies now need approval from the central bank to purchase as little as US$50 million.
Last year, Evergrande delivered 300,000 apartments, about half its target, to its customers. In the first half of this year, it delivered 120,000 apartments. Media reports say the company still is obligated to deliver 400,000 more apartments to its buyers.
Last Saturday, a social media post about Hui’s arrest went viral on the Internet. It said Hui was handcuffed as he had resisted the arrest.
Ran Xiongfei, a veteran soccer reporter, who is believed to be familiar with the situation, said people should not trust or spread the rumor but wait for an official announcement. Some other commentators said it’s unlikely that a 64-year-old billionaire would resist an arrest.
Chen Panpan, a Beijing-based writer, says that, if Hui is going to face penalties, it will probably be due to the inability of Evergrande’s wealth management unit to repay its investors.
“When Evergrande’s wealth management arm had overdue payments in September 2021, Hui Ka-yan made a promise that its investors would be paid,” Chen says. “But due to Evergrande’s worsening financial situation, the wealth management firm had changed its payment plans several times.”
On August 31 this year, Evergrande’s wealth management unit said it couldn’t make payments for investment products for the month due to a liquidity crunch. On September 16, the unit’s staff were detained by police in Shenzhen. The police called on the public to provide information about the case.
A Hubei-based writer says Evergrande’s potential bankruptcy not only will hurt homebuyers’ confidence but also will cause losses to the developer’s creditors, such as banks, investors and suppliers, and shake the financial systems. He says regulators should launch effective measures to avoid a financial crisis and boost market confidence.
Read: Evergrande’s debt case hits China’s stock markets
Follow Jeff Pao on Twitter at @jeffpao3
