Developer China South City stock sinks 37% to record low in Hong Kong after warning of multiple bond defaults
- The developer crashed 37 per cent as trading resumed after the Lunar New Year break, extending the slump to 76 per cent over past 12 months
- The firm warned last week it would not be able to pay interests on bonds maturing in April and October this year
The Shenzhen-based company tumbled to HK$0.134 on Wednesday in Hong Kong from HK$0.212 on Friday as trading resumed after a two-day Lunar New Year break, the lowest close since its listing in September 2009.
Today’s slump extended the stock’s loss over the past 12 months to about 76 per cent, and erased as much as HK$48.3 billion (US$6.17 billion) of market value from the stock’s all-time high of HK$4.35 in March 2014.
The cumulative effect of China’s crippled property market has put an increasing strain on the company’s working capital, it said. Sales had been below expectations and cash flow was only sufficient to fund daily operations, it added.
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China South City said its operations and financial situation have not yet sufficiently improved and that it would not be able to make the mandatory redemption on February 9 with respect to notes maturing in October 2024. It also said it would not be able to make an interest payment due on February 12 on a bond maturing in April 2o24.