China
Shares of China Evergrande’s electric car unit plunged as much as 26 percent on Monday after it warned it faced an uncertain future unless it got a swift injection of cash and after it said it will not proceed with plans to issue yuan-denominated shares, Al Jazeera reported. The warning by China Evergrande New Energy Vehicle Group after the market closed on Friday was the clearest sign yet that the embattled property developer’s liquidity crisis is worsening in other parts of its business.
Bankrupt Chinese conglomerate HNA Group moved a step forward in its restructuring process on Monday with a plan to inject fresh capital into its core airline subsidiary, Nikkei Asia reported. Investors in Hainan Airlines Holding agreed to a plan to double the capital base and allot new shares to a designated strategic investor and a certain group of creditors who will be compensated in stock, according to an announcement.
China sent shock waves through global markets on Friday after its central bank issued a shock statement that said all cryptocurrency-related transactions are illegal and must be banned, Sharecafe reported. It was the strongest signal from the country of its determination to crack down on the industry, even though it is working on its own cryptocurrency. The surprise announcement and the way it was slipped out on Friday on the PBOC website, with no minister’s name attached, also raised eyebrows.
The bankruptcy of Chinese real estate company Evergrande is much more than a “Chinese Lehman,” according to an OpEd in Eurasia Review. Lehman Brothers was much more diversified than Evergrande and better capitalized. In fact, the total assets of Evergrande that are on the brink of bankruptcy outnumber the entire subprime bubble of the U.S. The problem with Evergrande is that it is not an anecdote, but a symptom of a model based on leveraged growth and seeking to inflate GDP at any cost with ghost cities, unused infrastructure and wild construction, according to the OpEd.
China’s HNA Group, which declared bankruptcy earlier this year after struggling to pay off debts that once totalled over $100 billion, has added a new chapter to its restructuring as two of its top officials have been taken away by police, mingtiandi.com reported. Chairman Chen Feng, who founded Hainan Airlines in 1989 and grew it into the sprawling conglomerate known as HNA, was detained for suspected crimes, along with chief executive Adam Tan, HNA said in a statement to its official WeChat account late Friday.