Hong Kong stocks sink, extending a four-month slide, as Evergrande races against time to repay debt

Stocks slid by the most in two weeks, adding to more than US$576 billion sell-off in Hang Seng Index members since the end of May

Evergrande halted trading amid asset-sale efforts as founder races against the clock to prevent a collapse while more repayment deadlines loom

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Hong Kong stocks take an early beating while shares in developer Evergrande are halted from trading amid concerns about default. Photo: EPA-EFE

Published: 10:28am, 4 Oct 2021Updated: 8:48pm, 5 Oct 2021

Hong Kong stocks sank by the most in two weeks, extending a four-month rout, with traders bracing for a fallout in China Evergrande’s debt crisis. Shares of the Chinese developer and its property management arm were halted from trading as more debt repayment deadlines loom this month.

The Hang Seng Index fell 2.2 per cent to 24,036.37, a level not seen since October 6 last year. The benchmark has lost some 17.5 per cent since the end of May, erasing more than US$576 billion of market value from its members. The Hang Seng Tech Index retreated 2.1 per cent. Financial markets in mainland China are shut through Thursday for the National Day break.

WuXi Biologics sank 8.6 per cent while Xinyi Glass tumbled 8.2 per cent and Sino Biopharmaceutical lost 5.1 per cent. Among Chinese Big Tech, Alibaba Group Holding declined 3.7 per cent and its unit Alibaba Health Information fell 4.6 per cent.

Evergrande’s liquidity crunch and its potential contagion risks weighed on market sentiment as founder Hui Ka-yan races against the clock to raise cash to save his flagship from collapsing. The developer is putting up its assets for sale, including stakes in its two Hong Kong-listed units, to repay creditors and avert a default after selling a stake in its banking unit last week.

Evergrande and its 60.8 per cent-owned Evergrande Property Services Group were both suspended from trading. Local mainland media Cailian said Evergrande will sell 51 per cent of the property unit to Hopson Development, whose stock was also halted.

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