Chinese property stocks sink tracking fresh default fears

Investing.com-- Shares of Chinese property developers fell on Tuesday after another developer said it had missed an interest payment and warned that it may not be able to meet all offshore debt obligations.

Agile Group Holdings Ltd (HK:3383) sank as much as 15% in Hong Kong trade after it said a grace period for interest payment on a $483 million senior note had expired without being met on Monday. 

The firm said in a filing that it will maintain communication with its creditors to meet a “best possible” solution. It also added that it had not yet received a notice for accelerated debt repayment from any of its creditors for the senior note. 

Agile’s announcement saw the firm join a growing list of Chinese real estate firms that are struggling to meet their debt obligations, amid a prolonged downturn in the property market. High-profile casualties of this downturn include China Evergrande Group (HK:3333) and Country Garden Holdings Company Ltd (HK:2007), both of which are negotiating with their creditors over a debt restructuring plan. 

Agile’s peers, including Powerlong Real Estate Holdings Ltd (HK:1238), Logan Property Holdings Co Ltd (HK:3380), Sunac China Holdings Ltd (HK:1918) and Wharf Real Estate Investment Co Ltd (HK:1997) sank between 0.7% and 4.1% in Hong Kong trade on Tuesday. 

Losses in property stocks also kept the Hang Seng index trading sideways.

Still, recent losses in property stocks also held some element of profit-taking, after the sector rose sharply over the past two weeks.

China loosened home buying restrictions across several major cities, with the measures aimed at further stimulating the property market and stemming a downturn in the sector- which accounts for at least a quarter of China’s overall GDP.

Beijing also outlined plans for a massive 1 trillion yuan ($138 billion) bond issuance, which will begin this week.

China Vanke  (HK:2202) was also an outlier among its peers on Tuesday. Hong Kong shares of the firm rose 0.4% after local media reports said the property developer had recently acquired a large dose of funding from multiple banks.