Shares and bonds of China’s most indebted property developer China Evergrande Group have fallen 80%, while interest payments on its wealth manglement management products have failed to pay out, and deposits on presold unbuilt apartments are left in question. Other Chinese development company securities are selling off on contagion fears.
Many of the investors are Evergrande workers after the company encouraged staff to purchase the products. This tale-as-old-as-time offers a wake-up call on similar allocation mistakes made by savers in many countries today. Central banks can’t offset the weight of speculative unwinding destined to unfold globally. As usual, the focus shifts to the return of principal in the end. No free lunch.
…“When I bought the products, they told me it was very safe because this is a Global 500 company,” said Hu, who only gave his family name.
Evergrande has offered annualized interest rates of as much as about 13% on the products, higher than those typically sold at banks, and proceeds were to replenish working capital, according to the people. Some of the cash was invested in projects across China, they said, citing Du’s briefing.
Here is a direct video link.
;
