Cross posted from Investing in Chinese Stocks:
Following the first bankruptcy of the year, a top 20 developer has called it quits, with Kaisa quickly going from default (Top 20 Developer Defaults) to bankruptcy.
Mingtiandi has a good roundup: KAISA DECLARES BANKRUPTCY HALTS PAYMENTS TO CREDITORS
According to reports in the local media, Kaisa’s board met this afternoon and decided to halt operations. The board decision came the same day that the company announced that two of its project partners are claiming the Shenzhen-based company has failed to meet its obligations and are demanding RMB 1.2 billion ($196 million) in refunds.
The HSBC loan default, as well as the declarations from the company’s partners revealed today had put the developer, which as recently as two years ago had ranked 17th among China’s biggest real estate companies, at risk of other creditors calling in loans and debentures under cross-default clauses.
Kaisa’s bankruptcy is likely to pour cold water on investor enthusiasm for shares and bonds from China’s real estate developers, just as the sector had been enjoying a rally on local and regional markets.
And those bonds are increasingly U.S. dollar denominated.
Public confidence in the real estate fairy crumbles, showing that price rises lead confidence, with an iFeng article (9成城市房价跌回1年前 一城市同比跌逾10%) on the latest 100 City Housing Data from CREIS, covered here. At the end of the article is an online poll with three questions.
1. Do you think the Beijing market will recover?
2. Will the mortgage rate cuts influence your buying decision?
3. Will home prices in Beijing rise in 2015?
