Sinic Holdings Group Co. has stopped trading after a 87% collapse in its shares this Monday in afternoon trading.
The Shanghai-based Chinese property developer did not give a reason for the halt in trading in Hong Kong, China. The sudden downfall in the past two hours going into the suspension was accompanied by an increase in trading volume that was around 14 times its average in the previous year, according to the Bloomberg-compiled numbers and data points.
The firm has had a 9.5% $246 million bond which is due on October 18 and Fitch Ratings changed its rating to negative in the last week. The Monday share fall has cut its market value to right under $230 million, which is very low for a listed developer in the city. An executive at the firm’s Hong Kong office stated that there is nobody to answer media inquires.
“It is the same story as is seen everywhere else — investors have concerns about liquidity,” stated Philip Tse, head and leader of China and Hong Kong property research at Bocom International Holdings Co Ltd. “I believe there are most likely margin calls on some of the top shareholders” by looking at the stock price pattern which happened this afternoon.
The move comes as Hong Kong’s property lowered the most since May 2020 during growing investor anxiety about China’s property crackdown and concerns that Beijing could tighten their grip on the city’s real estate sector in its “Common Prosperity” drive.
Risk-off sentiment in global markets was all over this Monday. Junk-rated China bonds went down by as much as 2 cents. The HK dollar fell to the lowest amount this month.
This comes at a time when Americans are increasingly worried about the state of the U.S. economy. With prices going up on common household items such as gas, food and rent. Now, with this very public collapse is China, many investors are worried about a domino affect and how it might reach the American economy given the interconnected nature of Chinese banking with U.S. banks and other financial institutions.
Author: Scott Dowdy
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