Thursday, October 28, 2021

Evergrande says stocks have an edge, it will pay interest

World shares and US futures advanced on Wednesday after Chinese developer Evergrande said it intended to make interest payments on its debt due on Thursday.

Shares rose in Paris, Frankfurt and Shanghai but declined in Tokyo.

Markets have been shattered by uncertainty over Evergrande’s struggle to meet debt payments and anything the Chinese government can do to limit the impact of a potential default.

Evergrande, one of China’s largest private sector conglomerates, said on Thursday it would pay off 4 billion yuan ($620 million) of bonds denominated in Chinese yuan.

Exterior view of China Evergrande Center
Exterior view of the China Evergrande Center on March 26, 2018 in Hong Kong, China. (Bobby Yip/Reuters)

A statement from the company did not indicate whether this meant any change in payments. The bond has a 5.8 percent interest rate, which would make a typical amount of 232 million yuan ($36 million) for one year.

Evergrande did not provide any information in March about potential future payments, including bonds denominated in US dollars.

“Although banks have yet to declare Evergrande in technical default, Beijing’s silence is adding to the panic in the market,” Mizuho Bank’s Venkateswaran Lavanya said in a commentary.

Germany’s DAX rose 0.6 percent to 15,444.30 and Paris’ CAC 40 rose 1.2 percent to 6,630.19. The FTSE 100 in London gained 0.9 per cent to 7,042.98. US futures also rose, with contracts for Dow industrialists rising 0.6 per cent. The future of the S&P 500 rose 0.4 percent.

The yield on the 10-year Treasury was steady at 1.33 per cent, up from 1.32 per cent late Tuesday.

In Asia, Tokyo fell but other major regional benchmarks were mostly higher, narrowing early losses.

The Bank of Japan kept its hyper-supportive monetary policy unchanged as expected.

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Tokyo’s Nikkei 225 index was down 0.7 per cent at 29,639.40, while the Shanghai Composite index was up 0.4 per cent at 3,628.49. Australia’s S&P/ASX 200 rose 0.3 percent to 7,296.90. Shares in Taiwan fell 2 per cent and were also down in Singapore. But benchmarks rose in India, Indonesia and Malaysia.

Markets in South Korea and Hong Kong remained closed for the holidays.

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A woman walks by the electronic stock board of a security firm on September 22, 2021 in Tokyo, Japan. (Koji Sasahara/AP Photo)

The Federal Reserve is expected to send its clear signal this week that it will begin to rein in its ultra-low-interest rate policies later this year, undermining the extraordinary support it has given to the economy since the pandemic 18 months ago. The first step towards .

Wednesday’s Fed policy meeting could lay the groundwork for announcing a pullback in November.

After the sell-off on Monday, the nerves appeared to be stabilizing on Tuesday.

The S&P 500 lost 0.1 per cent and the Dow Jones Industrial Average also declined 0.1 per cent.

The Nasdaq Composite rose 0.2 percent and shares of the smaller company also gained. The Russell 2000 Index rose 0.2 per cent.

In other trade, US benchmark crude oil rose $1.04 to $71.53 a barrel in electronic trading on the New York Mercantile Exchange. It rose 35 cents to $70.49 on Tuesday.

Brent crude, the standard for international pricing, rose 98 cents to $75.34 a barrel.

The US dollar rose from 109.23 yen to 109.42 Japanese yen late Tuesday. The euro rose from $1.1726 to $1.1732.

by Elaine Kurtenbach

The Associated Press

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This News Originally From – The Epoch Times

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