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Asia Markets Suffer As Inflation And Evergrande Dominate

The plummeting value of the ailing property giant’s shares dragged the Hang Seng back with traders also worried about rising prices and Fed tapering


stock markets
Hong Kong, Tokyo, Singapore, Seoul, Mumbai and Jakarta all fell into the red on Thursday. AFP photo.

 

Asia’s major markets slipped backwards on Thursday with unsure investors caught between more positive earnings data and ongoing concerns about inflation and central bank tapering – while Hong Kong was pulled downwards as Evergrande plummeted by 12% after the property giant resumed trading.

Surging global prices have sent shivers through trading floors for much of this year as central banks have been forced to tighten their ultra-loose, pandemic-era monetary policies, but a string of broadly on-target or forecast-beating corporate reports have provided a much-needed respite.

The Dow and S&P 500 closed within spitting distance of record highs after the latest results, while dealers brushed off a Federal Reserve summary of the economy that said transport constraints and shortage of goods had led to “significantly elevated prices” in most areas of the United States, slowing growth.

 

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The advances filtered through to most of Asia in the morning but some markets were unable to maintain momentum. Sydney, Wellington, Taipei, Manila and Bangkok eked out minor gains.

But Hong Kong, Tokyo, Singapore, Seoul, Mumbai and Jakarta all fell into the red with the news about China Evergrande casting a pall over proceedings.

The property giant resumed trading after a more than two-week suspension to say the planned sale of its property services arm had collapsed.

It also warned it could not guarantee it would meet its debt obligations, days before a 30-day grace period on an offshore bond ends at the weekend, raising expectations it will default and spark a massive restructuring.

Shares in the embattled company tanked more than 13% in the afternoon and Justin Tang, of United First Partners, warned that “without the infusion of cash from the sale” of assets, the firm’s share price “is going to take the elevator down.”

There had been hope that the $2.58 billion sale of a 50.1% stake in Evergrande Property Services Group would provide it with much-needed capital to service its debts.

 

Debt Payment Deadlines

Shares in the services arm fell more than 4% when news that the deal had collapsed emerged, while Hopson Development – the firm that had been in the buy-out talks – rose more than 5%.

The news will again raise worries about the impact on the wider economy, with the property sector accounting for a huge chunk of China’s gross domestic product and several other developers recently failing to meet debt payment deadlines.

Data this week showed the country’s economic growth was slower than expected in the third quarter.

Still, top officials at the People’s Bank of China and regulators have insisted the fallout from the crisis can be contained.

Despite the news, other Hong Kong-listed property firms rose, while mainland Chinese markets were also up.

 

Bitcoin’s NYSE Boost

The Hang Seng Index sank 0.45%, or 118.49 points, to 26,017.53. Evergrande ended down more than 12%. The Shanghai Composite Index rose 0.22%, or 7.78 points, to 3,594.78, while the Shenzhen Composite Index on China’s second exchange eased 0.16%, or 3.86 points, to 2,416.18.

The Nikkei 225 index fell 1.87%, or 546.97 points, to 28,708.58, while the broader Topix index lost 1.32%, or 26.86 points, to 2,000.81.

Bitcoin was sitting around $65,000, having risen on Wednesday to a new record high of $66,976 after a financial instrument dedicated to the unit made a successful debut on the New York Stock Exchange.

The digital unit has surged more than 50% over the past month and an eye-watering 450% over the past year, and analysts are now whispering the possibility it could hit $100,000 soon.

 

MARKETS

Hong Kong > Hang Seng Index: DOWN 0.5% at 26,017.53 (close)

Tokyo > Nikkei 225: DOWN 1.9% at 28,708.58 (close)

Shanghai > Composite: UP 0.2% at 3,594.78 (close)

London > FTSE 100: DOWN 0.3% at 7,201.76

New York > Dow: UP 0.4% at 35,609.34 (close)

 

  • AFP with additional editing by Sean O’Meara

 

Read more:

China Evergrande Shares Slide After $2.6bn Deal Collapses

China Officials Play Down Risk of Evergrande Spilling Over

 

 

Sean OMeara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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