China's mom-and-pop investors, builders and homebuyers caught in Evergrande debt crisis
(Fixes typo in first paragraph)
* Troubled developer owes buyers of WMPs, homes
* Builders on Evergrande projects left unpaid
* Chairman reiterates top priority is to help investors
By Josh Horwitz and David Kirton
SUZHOU/SHENZHEN, China, Sept 23 (Reuters) - At an eerily quiet construction site in eastern China's Suzhou, worker Li Hongjun says property developer Evergrande's debt crisis means he will soon run out of food. Christina Xie, who works in export in the bustling southern city of Shenzhen, fears Evergrande has swallowed her life savings.
The pair, united like legions of others by their connections to the vast China Evergrande Group 3333.HK , show the scale of the challenge facing the Chinese government in managing its financial woes, although economists downplay the risk of a "Lehman moment" style collapse.
Evergrande, with outstanding debts of $305 billion, recently stopped repaying some investors and suppliers and halted building work at projects across the country, setting off global alarm bells over upcoming interest payments.
Li, who says he has not been paid since August, is doing minimal maintenance among half finished apartment blocs whose outer shells hide rubble-filled interiors. Sand and concrete slabs cover a just-finished marble floor in one future home.
"In the past two days I’ve been planning to go to the government," he said. "What can I do? Soon I’ll have no food to eat. If I have no food to eat I’ll have to go to the government to eat.”
Xie put 380,000 yuan ($58,770) of savings into a wealth management product sold by Evergrande and says she did not receive a payout of 30,000 yuan due to her earlier this month.
"It's all my savings. I was planning to use it for me and my partner's old age. I worked day and night saving, now it's game over," said Xie, who was told that the wealth management product that she bought would yield 7.5% a year.
"Evergrande is one of China's biggest real estate companies ... my consultant told me the product was guaranteed."
Xie still hopes to be able to redeem her investment, one of billions of yuan in wealth management products Link (WMPs) sold by Evergrande, but she is not satisfied with any of the options suggested so far, which include the offer of property.
Evergrande did not immediately reply to a request for comment, but chairman Hui Ka Yan told a late-night meeting on Wednesday that the top priority is to help investors redeem their products and that home deliveries should be ensured.
Angry homebuyers and retail investors launched protests in several cities in recent weeks - anathema to China's stability-obsessed ruling Communist Party.
Property accounts for 40% of assets owned by Chinese households, according to Macquarie, which means contagion from a potentially messy Evergrande collapse could reverberate beyond households and investors to suppliers and construction workers.
A crackdown on debt in the sector has ended a freewheeling era of building with borrowed money which became infamous for ghost cities and roads to nowhere.
"It is important from a social stability standpoint to make sure that Chinese retail investors get their money back and that homebuyers get their homes delivered," said Carlos Casanova, senior economist for Asia at Union Bancaire Privee.
Analysts at Capital Economics estimated that as of end-June, Evergrande still had to complete around 1.4 million properties, around 1.3 trillion yuan ($202 billion) in pre-sale liabilities.
One woman who bought an Evergrande property in the northeastern city of Shenyang and asked not to be identified has been waiting since April 2020.
She said she is spending 3,000 yuan a month on mortgage repayments on the 600,000 yuan she has already put down but that the building site is now closed and she doubts Evergrande will make its latest delivery deadline of Dec. 30.
Meanwhile, roughly 40 billion yuan of the group's WMPs are outstanding, a sales manager at Evergrande Wealth told Reuters previously.
More than 80,000 people – including employees, their families and friends as well as owners of Evergrande properties - bought WMPs that raised more than 100 billion yuan in the past five years, the sales manager told Reuters, lured by the promise of yields approaching 12%.
Regulators summoned Evergrande's executives last month and issued a rare warning that the company needs to reduce its debt risks and prioritise stability. ($1 = 6.4659 Chinese yuan renminbi)
Additional reporting by Clare Jim, Tom Westbrook, and Andrew Galbraith; writing by Gabriel Crossley; editing by Tony Munroe and Philippa Fletcher
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.