Sunac China Holdings (HKG: 1918) shares have been as high as 27% up today, falling back to this 12% at our pixel time. The jump is on the announcement that Sunac thinks it has met the necessary debt restructuring conditions. Now, whether this is enough to deal with what might happen next in China’s property industry is another matter. But it might well mean that the past financial burdens are alleviated. Maybe. The New York court has signed off on it.
There’s also this news about how the Chinese Government might deal with the sectoral problem: “Chinese developers’ bonds gained along with their shares after authorities began drafting a list of 50 real estate firms that would be eligible for a range of financing as Beijing sought to support the embattled property sector. September. Sunac China Holdings Ltd., the first major Chinese builder to reach a restructuring agreement, led the sector’s rise as it rallied as much as 27%. Seazen Group Ltd. and Agile Group Holdings Ltd. also climbed. The so-called white list, which is intended to guide lenders as they weigh support for the industry via bank loans, debt and equity financing, may help alleviate fears of further contagion in China’s property sector.”
The big question for that sector has long been what, if anything, the Mainland government was going to do about it all.
Sunac China Holdings share price from Google Finance
As that surge and then fall back shows, not everyone is convinced that this is a final solution: Shares of Sunac surged on Tuesday after the beleaguered Chinese property developer said it has started executing its plans to overhaul its debt after satisfying restructuring conditions.
Hong Kong-listed shares of Sunac jumped 21% to 2.820 Hong Kong dollars, trading at its highest level in two months.” 21% up, yes, but falling back to only that 12% up.
We’ve looked before at Sunac China Holdings: “Sunac China Holdings (HKG: 1918) shares are up 30% today on what we assume is a byblow from the Ping An story. That’s the seeming insistence that the insurance company should take over Country Garden, the bust property developer. Our view on the Ping An/ Country Garden combination is that it would be a disaster but maybe that’s just us.” That Ping An story turned out not to be true. Which means we would want to see real evidence of that white list having an effect before we believe in it all that much.
The other thing is, well, we’re really not certain that even government support is going to support the China property market and therefore the overindebted firms within it. We tend to believe that it’s one of those problems that isn’t going to get solved without widespread bankruptcies - and not just debt renegotiations.