Country Garden shares slump to record low after onshore bond trading halted

Chinese property giant Country Garden's shares plunged to a fresh record low on Monday, while its offshore bonds were also pressured after its onshore paper was suspended from trading as its debt problems deepened. Markets remain jittery as the trouble in China's largest private property developer could have a chilling effect on homebuyers and financial institutions, further dampening the prospect of a near-term recovery in the sector and the broader economy. A core pillar of China's economy, the real estate sector has already seen plunging sales, tight liquidity and a series of developer defaults since late 2021.

Shares of Country Garden shed more than 15 per cent to HK$0.83 in morning trading, dragging down the Hang Seng Mainland Properties Index which dropped 4.6 per cent. The stock has lost nearly 50 per cent so far this month. Country Garden's offshore bonds also eased, with a few trading at the lower end of 6 cents on the dollar. Its January 2031 bond traded at 6.071 cents as of 0228 GMT, according to data by Duration Finance.

In separate filings during the weekend, the firm said it would suspend trading in 11 of its onshore bonds from Monday, and their resumption of trading would be determined at a later date. The move followed reports on Friday that the company was heading for a debt restructuring, after it missed payments of two dollar bond coupons due on Aug. 6 totalling $22.5 million.

Once considered a more financially sound developer, Country Garden's woes added to spillover concerns across a property market already grappling with weak buyer demand. State-owned China Jinmao said in a filing on Sunday it expected to post an 80 per cent decline in net profit in the first half of this year, due to a drop in gross profit margin in some projects and a decrease in land development revenue. Its Hong Kong-listed shares slumped over 7 per cent on Monday.