Struggling Chinese firms offloading assets means property bargains galore for foreign investors
A slowing economy and a campaign to reduce debt has forced many Chinese firms to sell assets they wouldn’t normally be looking to get rid of, say analysts
Tight liquidity in China has forced many companies to dispose of assets to keep themselves afloat, creating unprecedented bargain-hunting opportunities for overseas investors, according to analysts.
A slowing economy and a deleveraging campaign has caused a cash squeeze that has pushed many Chinese firms to sell assets and equities they would not normally be selling. The most high-profile case is HNA Group, which besides its overseas sales frenzy, has put up nine properties worth 14 billion yuan (US$2 billion) in China for sale.
An increase in loan defaults also means financial institutions are recovering those debts by disposing of collaterals in China – mostly land and properties, giving investors access to assets at a fraction of previous prices. Chinese banks’ bad loans rose 183 billion yuan to 1.96 trillion yuan by the end of June, the biggest quarterly jump in over a decade. Soured loans represented 1.86 per cent of total advances, the highest ratio since March 2009.
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“I hate to use the word ‘struggling’, but many developers are figuring out ways to cope with the lending restrictions,” said Jason Zhang, head of China outbound investment and advisory services, Cushman & Wakefield.