Chinese real estate market has been struggling since last year when the property giant China Evergrande defaulted on its loan payments. A company Evergrande was once the country’s second-largest real estate developer in terms of sales, is now encumbered by debts totaling more than $300 billion.
This has resulted in investors shifting to more stable markets like India. According to a recent report from the Bank of New York Mellon Corporation, inflows of capital have increased in South Korea, Indonesia, Singapore, India, Malaysia, and Japan. Meanwhile, China has seen outflows as expected.
“We quite like the India space because there is a lot of ESG bond supply coming from those companies and they aren’t quite expensive compared to other Asian peers,” said Paula Chan, a senior portfolio manager at Manulife Investment Management (Hong Kong) Ltd.
This will prove to be beneficial for the Indian real estate market and help in the economic recovery. But experts believe that the situation may not be good for the global market in the long term if the ongoing crisis persists. Defaults by Evergrande will lead to a larger economic slowdown and will affect other regions as well.
According to reports the company has been asked to sell a huge chunk of its assets to resolve the ongoing crisis. The authorities are considering dismantling the group. Sources suggest that officials have submitted a report to Beijing that suggests selling most of the group’s assets except for the separately listed property.
The group in December had formed a crisis management committee which includes Siu Shawn, the chairman of Evergrande New Energy Vehicle Group when a group of its offshore creditors said they were ready to take “all necessary actions” to defend their rights if the company did not show more urgency to resolve a default.
In the first week of January, the company’s shares were suspended from trading. Evergrande held an investor call on 26th January which was joined by the financial advisers of the group. the first such call since it defaulted on some dollar bond payments last month.
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