The crisis of the Chinese real estate group Evergrande led to heavy losses on the stock exchanges around the world on Monday. In Switzerland, the titles of UBS and Credit Suisse are particularly popular. UBS loses over four percent by noon, and CS shares almost six percent.
The minus SMI is not that bad. At lunchtime, the index, which includes the country’s 20 most important stocks, is only 1.6 percent in the red. The German DAX and the French CAC 40, on the other hand, lost more than 2 percent of their terrain. And the minus in Hong Kong, where Evergande is listed, is over 3 percent.
Evergrande has accumulated more than $ 300 billion in debt. The troubled corporation has to find fresh money to pay banks, suppliers and bondholders on time. Investors fear a default.
Beijing is taking action
The problems have worsened for Evergrande in recent months, according to observers, as Beijing enforces stricter rules for the country’s highly indebted real estate sector.
This week, the company from Shenzen has to make several interest payments, as the financial service Bloomberg reported. Accordingly, the first repayment was due on Monday, but with a postponement until Tuesday. Another tranche is due on Thursday. However, it was unclear how the Chinese holidays affected the repayment process. Investors are eagerly awaiting signs from the government as to whether and in what form they will rush to help the company.
Over the weekend, Evergrande offered investors to compensate them with real estate. The offer is therefore aimed at buyers of the company’s asset management products. Evergrande also admitted misconduct by several high-ranking managers. Six executives illegally redeemed several of the company’s investment products in advance. The company announced on Saturday that the matter is being taken very seriously.
UBS in the thick of it
Most recently, rating agencies downgraded Evergrande’s credit rating several times. Since the beginning of the year, the Group’s share price has fallen by over 80 percent.
Evergrande instructed financial advisors to examine “all possible solutions” to overcome the liquidity crisis, according to a statement last week, but warned at the same time that there was no guarantee that the company could meet its financial obligations.
UBS is apparently in the middle of this mess. She is one of the largest investors, the leading lenders – but also one of the early warners, reports the finance portal “Inside Paradeplatz”. (SDA / ise)