© Reuters.
Hong Kong’s stock market witnessed a significant surge in the shares of China Evergrande (HK:) Group on Tuesday. The heavily-indebted real estate developer’s shares jumped over 60% early in the session, settling at a nearly 16% increase by midday. This came after a suspension in trading last week due to an investigation into its chairman, Hui Ka Yan, on suspicion of illegal activities.
Trading also resumed for Evergrande Property Services, an affiliate of the beleaguered developer, according to a notice on the Hong Kong Stock Exchange. However, trading for shares in China Evergrande New Energy Vehicle Group remained suspended pending the release of an announcement related to inside information of the firm.
The property giant had previously announced that it could not issue new debt as its subsidiary, Hengda Real Estate, was under investigation. Furthermore, Evergrande had to delay a proposed debt restructuring meeting with creditors last month as sales did not meet company expectations.
The Chinese property sector, a crucial pillar of the nation’s economy, has been under pressure since regulators tightened borrowing rules in 2020. This led to Evergrande defaulting on its debt and contributed to a broader slowdown in China’s economic growth.
Meanwhile, global markets are grappling with the impact of rising interest rates. On Monday, stocks mostly slipped in mixed trading as Wall Street felt the tightening grip of higher interest rates. The yield on the 10-year Treasury rose Monday to 4.67% from 4.58% late Friday, its highest level since 2007.
Asian markets declined Tuesday following this mixed session on Wall Street. Hong Kong’s dropped more than 3%, with investors unloading property shares despite the surge in Evergrande’s stock. Other significant Asian markets such as Tokyo’s and Australia’s also experienced losses.
The U.S. market showed a similar trend with the ending little changed on Monday, while the slipped 0.2%. The , however, rose 0.7%.
Oil-and-gas stocks sank as crude prices gave back some of the sharp gains made since the summer. Early Tuesday, U.S. benchmark was down 71 cents at $88.11 per barrel in electronic trading on the New York Mercantile Exchange. This price pullback weighed on energy stocks with Exxon Mobil (NYSE:) falling 1.7% and Chevron (NYSE:) losing 1.2%.
Despite these challenges, the overall U.S. economy has so far been holding up, defying predictions that it would have fallen into a recession by now.
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