New Evergrande crisis after crucial debt deadline missed

SHARES in crisis-hit Chinese property firm Evergrande tumbled again yesterday after a key debt payment deadline was missed, reigniting fears that it could collapse.

They fell nearly 12pc in Hong Kong after it failed to pay £61m in interest on some of its bonds, meaning that it now has 30 days to make the payment before being in default.

The stock was boosted on Thursday after a deal over a separate £26m payment, but once again investors are on edge. Evergrande is the world’s most indebted property developer, owing around £220bn.

It claims to have built homes for more than 12m people since being founded in 1996. But the firm has come under mounting pressure in recent months from falling sales, disputes with contractors and suspension of work at some sites.

Its share price has plummeted since it warned in August that it may have trouble servicing its debt repayments, putting investors and millions of Chinese homebuyers in limbo. Protesters have besieged Evergrande’s Shenzhen headquarters to demand payment for homes and investments.

There are fears that if the firm fails, and is not bailed out by the Chinese government, it will set off a domino effect across China’s massive property market.

Worries of ‘contagion’ have begun to hit other major Chinese property groups, with shares in Sunac China, based in Tianjin, near Beijing, dropping nearly 7pc yesterday after one of its offices warned of a ‘radical change’ in the real estate industry. Some analysts expect the crisis to deepen, with Danske Bank in Denmark saying the turmoil will ‘get worse before it gets better’. However, analysts also expected the Chinese government to step in as the alternative could be ‘a financial crisis with very severe effects on the economy and people’.

Andrew Left, of Citron Research, said: ‘The Evergrande situation was a long time coming and China needed to rid this from their system.’