Connect with us

Business

Evergrande chief’s luxury assets in focus as his company scrambles to pay debts

Published

on

November 15, 2021

By Julie Zhu and Clare Jim

HONG KONG (Reuters) – As developer China Evergrande Group scrambles to meet its debt obligations, its founder is freeing up funds from luxury assets including art, calligraphy and two high-end homes, according to filings and a person with knowledge of the matter.

Chinese authorities have told Evergrande chairman Hui Ka Yan, 63, to use some of his personal wealth to help pay bondholders, two separate people with knowledge of the matter told Reuters last month.

Advertisement

Evergrande’s troubles in meeting bond repayments have rattled markets and left many of its investors, creditors and suppliers in financial chaos.

Guo Hui, whose cleaning business is owed more than 18 million yuan ($2.8 million) by Evergrande, had to sell his Porsche Cayenne and an apartment to raise cash and pay debts.

“He should be selling his things,” Guo told Reuters. “He had no choice once the authorities made him.”

Hui pledged one of his Hong Kong mansions of around 5,000 square feet in The Peak, Hong Kong’s most prestigous residential enclave, for a loan from China Construction Bank in October, according to a filing with Hong Kong’s Land Registry.

Around HK$300 million was raised to repay an overdue Evergrande bond, local media reported.

Advertisement

The tycoon, ranked as Asia’s wealthiest man in 2017, pledged a second luxury house on The Peak to Orix Asia Capital Ltd on Nov 8. for an undisclosed amount, according to the Land Registry.

With sweeping views over the city’s gleaming skyscrapers, the properties are worth around HK$800 million each, an estate agent told Reuters.

Hui and Evergrande did not respond to requests for comment regarding the properties on The Peak.

China’s State Council Information Office did not immediately respond to a request for comment.

LUXURY ASSETS

Advertisement

Raised by his grandmother in a rural village, Hui founded Evergrande in 1996 in southern Guangzhou city, supplying low-priced homes and building a fortune.

He developed a passion for calligraphy, art and Koi carp – fish seen as a symbol of good luck and fortune for which he paid tens of millions of yuan, according to a source with direct knowledge of the matter.

Under Hui’s orders, Evergrande has been selling some art and calligraphy to raise fresh capital, said the source. The source declined to be named due to the sensitivity of the situation.

Reuters could not immediately determine how much had been raised by selling the art pieces or what the money has been used for.

Evergrande did not respond to a request for comment regarding the art sale.

Advertisement

The source also said Evergrande sold two Gulfstream jets in recent weeks.

The Wall Street Journal reported earlier this month Evergrande raised more than $50 million by selling two of its private jets to American aircraft investors.

Hui also owns a 60-metre yacht called “Event” estimated to be worth $60 million, as well as a private Airbus jet, according to Chinese media reports.

Reuters could not independently verify the ownership of Hui’s yacht and private jet.

Hui and Evergrande did not respond to requests for comment regarding his aircraft, yacht and other assets.

Advertisement

While Hui’s net worth has plunged over the past few years from around $45 billion in 2017, he is still estimated to be worth $11.3 billion, according to the Hurun China Rich List 2021, released last month.

But even as he moves to sell some of his personal assets, the proceeds raised pale in comparison to Evergrande’s liabilities of more than $300 billion, equivalent roughly to the gross domestic product of South Africa.

After Evergrande last week again averted a destabilising default with a last minute bond payment, its next deadline is Dec. 28, with coupon payments totalling more than $255 million due.

($1 = 6.3807 Chinese yuan renminbi)

(Additional reporting by Sara Cheng in Hong Kong and David Kirton in Shenzhen; Writing by Anne Marie Roantree; Editing by Lincoln Feast.)

Advertisement

Continue Reading
Advertisement

Business

Asia braces for China data, oil nears 2021 highs

Published

on

January 17, 2022

By Wayne Cole

SYDNEY (Reuters) – Asian share markets got off to a cautious start on Monday as the U.S. earnings season loomed large and a slew of Chinese economic data were expected to show the deadening effect of coronavirus restrictions on activity.

A holiday in the United States made for thin trading, but that did not stop Brent crude from extending its bull run toward last year’s peak of $86.70 a barrel.

Advertisement

MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed, while Japan’s Nikkei bounced 0.8% after losing 1.2% last week

S&P 500 futures were flat, while Nasdaq futures slipped 0.1%.

The main feature of the market recently has been a rotation into value stocks and away from growth, particularly technology. The S&P 500 information technology sector, which accounts for nearly 29% of the index, has shed 5.5% this year.

With valuations still high, earnings will have to be strong to stop further losses. Overall S&P 500 earnings are expected to climb 23.1% this season, according to Refinitiv IBES, while the tech sector is seen up by 15.6%.

Companies reporting this week include Goldman Sachs, BofA, Morgan Stanley and Netflix.

Advertisement

The market will be spared speeches from Federal Reserve officials this week ahead of their Jan. 25-26 policy meeting, but there has been more than enough hawkish comments to see the market almost fully price in a first rate hike for March.

There was also talk the Fed will start trimming its balance sheet earlier than previously thought, draining some of the excess liquidity from world markets.

Yields on cash 10-year Treasuries climbed to their highest in a year at 1.8%, while futures implied yield of 1.83% early on Monday.

“The implications of quantitative tightening continue to occupy markets as an earlier Fed balance sheet runoff looms,” noted analysts at Barclays.

“Meanwhile, new COVID lockdowns in China could re-aggravate global supply bottlenecks, while in both Europe and the U.S. the near-term growth outlook is now weaker and the 2022 inflation profiles higher.”

Advertisement

Data out of China due on Monday are expected to show retail sales and industrial output slowed further in December. The economy is forecast to have grown 1.1% in the fourth quarter, though the annual pace is seen slowing to 3.6% from 4.9%.

BEWARE THE BOJ

A Bank of Japan (BOJ) policy meeting this week will bear watching given talk it will revise up its outlook for growth and inflation, while sources told Reuters policy makers were debating how soon they could start telegraphing an eventual interest rate hike.

While a move is unlikely this year, financial markets may be under-estimating its readiness to gradually phase out its once-radical stimulus programme.

This was one reason the yen has rallied, with the dollar slipping 1.2% last week to last stand at 114.29 but still well above major chart support at 112.52. [FRX/]

Advertisement

The euro also gained 0.5% last week as the dollar eased broadly and was last changing hands at $1.1408. The dollar index was a shade firmer at 95.231, after touching a 10-week trough at 94.626 on Friday.

“We continue to think that the greenback will strengthen again before long, as we expect strong cyclical price pressures in the U.S. to mean the Fed tightens by more and for longer than investors currently discount,” argued Joseph Marlow, an economist at Capital Economics.

They see Fed rates topping 2.5% while the market has priced in a peak around 1.75-2.0%..

The risk of higher rates kept non-yielding gold restrained at $1,817 an ounce, while industrial and energy resources have benefited from resilient demand and limited supplies.[GOL/]

Oil prices have climbed for four weeks straight and such is demand that physical barrels of oil are changing hands at near record high premiums. [O/R]

Advertisement

Early Monday, Brent had added another 51 cents to $86.57 a barrel and was approaching the 2021 top of $86.70 and the 2018 peak at $86.74. A break there, would take it to heights last visited in 2014.

U.S. crude also firmed 75 cents to $84.57 per barrel.

(Editing by Himani Sarkar)

Advertisement
Continue Reading

Business

Japan machinery orders rise more than expected, govt welcomes pick-up signs

Published

on

January 17, 2022

By Daniel Leussink

TOKYO (Reuters) -Japan’s core machinery orders rose for a second straight month in November, government data showed on Monday, a sign that corporate appetite for capital spending remained resilient despite pressure from soaring raw material prices.

The gain in core orders, a key indicator of capital expenditure, could be a relief to policymakers hoping for corporate investment to trigger a private demand-led recovery in the world’s third-largest economy.

Advertisement

Core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, grew 3.4% in November from October, rising for the second straight month, the Cabinet Office data showed.

It beat economists’ median estimate of a 1.4% rise and followed a 3.8% jump in the previous month.

However, Japanese firms could be cautious about boosting spending due to higher raw material, fuel and transportation costs that are sending wholesale inflation soaring and squeezing corporate margins.

“Firms may postpone capital spending from this quarter into the next fiscal year from April as uncertainty in the global economy has risen,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Due to a decline in coronavirus cases and an easing of the (global) chip shortage, orders from manufacturers recovered up to November, but the outlook is unclear.”

Advertisement

A government official confirmed firms’ appetite for capital spending faced risks from rising raw material prices, though he added companies were still likely to spend on investments to strengthen their businesses for the future.

Compared with a year earlier, core orders, which exclude volatile numbers from shipping and electric power utilities, jumped 11.6% in November, the Cabinet office data found.

By sector, orders from manufacturers rose 12.9% month-on-month, offsetting a 0.8% drop in those from non-manufacturers, the data showed.

The government raised its assessment on machinery orders for the first time in six months, saying they showed signs of picking up. Previously, it said a pick-up in orders was showing signs of stalling.

After contracting in the third quarter of last year, Japan’s economy is expected to return to growth in the October-December quarter.

Advertisement

The economy is forecast to show growth of an annualised 6.5% in that quarter, thanks largely to a projected pick-up in private consumption, which makes up more than half the economy, after an easing of coronavirus curbs.

(Reporting by Daniel Leussink; Editing by Kenneth Maxwell)

Continue Reading

Business

Credit Suisse Chairman Horta-Osorio resigns after board probe into breach of COVID-19 rules

Published

on

January 17, 2022

SINGAPORE (Reuters) -Credit Suisse Chairman Antonio Horta-Osorio, who was being investigated by the bank’s board for breaching COVID-19 quarantine rules, has quit with immediate effect and board member Axel Lehmann has taken over the role.

Horta-Osorio’s resignation comes less than a year after he was brought in to clean up a corporate culture marred by Switzerland’s second-largest bank’s involvement with collapsed investment firm Archegos and insolvent supply chain finance firm Greensill Capital.

“I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally,” Horta-Osorio said in a statement issued by the bank in the early hours of Monday.

Advertisement

“I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time.”

In late December, Reuters reported in an exclusive story that a preliminary investigation by Credit Suisse found that Horta-Osorio breached COVID-19 rules a second time.

He attended the Wimbledon tennis finals in July during a visit to Britain when the country’s COVID-19 rules required him to be in quarantine, Reuters cited sources as saying. [L1N2TF08K]

Credit Suisse said Lehmann, the board and the executive board would continue to implement Credit Suisse’s strategy.

(Reporting by Anshuman Daga in Singapore, Shivani Tanna and Maria Ponnezhath in Bengaluru; Editing by Himani Sarkar)

Advertisement

Continue Reading
Advertisement

Trending