Tuesday saw a 5.06% drop in the price of Country Garden’s shares, which are listed in Hong Kong, after news that the business had canceled its $300 million initial share issue. The property developer wanted to use the share placement to help it pay off its debt.
Other Chinese real estate equities were impacted by the downturn at Country Garden Services, the company’s division for property services. The Hang Seng Mainland Property Index, which monitors Chinese real estate stocks listed in Hong Kong, fell by 0.33%.
According to reports, Country Garden terminated the share placement just after midnight. JPMorgan, the placement’s bookrunner, confirmed the information. 1,800 million company shares were issued as part of the main share placement for HK$1.30 per share, or 17.7% less than the closing price on the Monday before.
One of the biggest real estate developers in China’s Mainland is called Country Garden. JPMorgan, meanwhile, cut Country Garden and Country Garden Services to underweight last week. The target price for Country Garden and its listing for property services was also significantly lowered by the bank.
Since the government started taking action in 2020 to address the nation’s spiraling debt levels, China’s real estate market has been dealing with a credit crisis. The new loss worsens the sector’s difficulties and lowers investor confidence in Chinese real estate equities.
Investors are still wary as the Chinese real estate industry struggles with regulatory obstacles and debt-related problems, which has an impact on how well-known developers like Country Garden perform over time. The withdrawal of the share placement highlights the industry’s unpredictability, difficulties, and necessity for deleveraging in the face of ongoing regulatory scrutiny.