Hong Kong’s benchmark stock index plunged 3.9% this morning and is on track to close at a near one-year low year as contagion spread from the collapse of shares at real estate developer China Evergrande Group into the financial industry.
Shares in China Evergrande Group led the way, falling 16.9% to HK$2.11. They’ve lost 88% from a recent peak in January, spawning protests from those demanding debt repayment and erasing much of the fortune its billionaire chairman Hui Ka Yin.
Other real estate developers fell on worries about a property market glut, debt repayment problems, and slower economic growth at a time when fallout from Covid-19 has already hurt spending.
Guangzhou R&F dropped 7.3% to HK$4.21. The more than halving of its value since May has cut into the fortunes of Hong Kong billionaire Li Sze Lim and mainland China billionaire Zhang Li.
A number of financial institutions with ties to Guangdong Province where Evergrande is based fell this morning. Among them, government-backed insurer Ping An lost 7.5% to HK$50.40; its shares have now declined by half from a recent high of HK$103.10 in January. China Merchants Bank plunged 9.3%.
Today’s carnage also spread to Hong Kong real estate stocks. New World Development, controlled by the Hong Kong billionaire Cheng clan, lost 11.40% to HK$30.70.
Mainland China stock exchanges are closed today and tomorrow for the Mid-Autumn Festival. The Hong Kong Stock Exchange will be closed on Sept. 22.
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