As China Evergrande Group edges closer to a massive restructuring, Beijing has stepped up efforts to limit the fallout, signalling it’s willing to prop up healthy developers, homeowners and the real estate market at the expense of global bondholders.
In the last week alone, Chinese authorities have dispatched top financial regulators to nudge the country’s massive banks to ease credit for homebuyers and support the property sector. They also bought out part of Evergrande’s stake in a struggling bank to limit contagion. The central bank meanwhile has pumped 790 billion yuan ($123bn) into the financial system over 10 days to ease liquidity.
The moves underscore that China will do everything it can to ring-fence Evergrande, while showing little interest in a direct bailout of the developer that has roiled global markets for weeks. That doesn’t bode well for bondholders – both onshore and abroad – looking for some kind of rescue from the Chinese government.
“The first obligation is going to make sure that homeowners who bought those homes take delivery and are made whole,” said Marathon Asset Management chief executive Bruce Richards, who started buying Evergrande debt last week.
“At the very end of the pecking order are offshore bondholders.”
For China, the risk of contagion far outweighs any potential damage from an Evergrande collapse on its own. Though Evergrande is one of the largest developers in China, it accounts for just 4 per cent of sales in the country. A run on property firms in the wake of an Evergrande failure threatens to destabilise an industry that accounts for 29 per cent of China’s economy, according to new research from Harvard University economist Ken Rogoff.
Already, developers such as Sunac China Holdings and Guangzhou R&F Properties have plunged in trading, while their bond yields have soared. Some 12 real estate companies have reported bond defaults in the first half of this year, amounting to 19bn yuan, according to Moody’s Investors Service.
Trading of Evergrande shares was suspended Monday in Hong Kong, along with those of its property management unit. No reason was given for the halts, according to a stock exchange filing. China’s markets are closed Monday for a holiday.
China also faces a potential backlash from the 1.6 million homebuyers who put deposits on Evergrande apartments that have yet to be built. Getting those projects completed would help avert the type of social unrest sparked last month by retail investors demanding payment on some 40 billion yuan in Evergrande high-yield investment products.
“A disorderly default of Evergrande is unlikely because of the broad-based risk it presents to a large amount of the Chinese population,” said Alejandra Grindal, chief economist at Ned Davis Research Inc. “The government is probably less concerned about restructuring the offshore debt.”
Homebuyers already face the threat of declining prices after years of gains. Measures of price growth, housing starts and sales have moderated significantly in recent months, Moody’s notes in a report.
Given the heightened risk of social unrest, Beijing will try to ensure that construction workers are paid first in any restructuring, followed by homebuyers, then suppliers and lenders, said James Feng, the founding partner of Poseidon Capital Group, a Chinese fund that specialises in distressed and special situation investments.
“It’s highly likely that Evergrande’s offshore bondholders will be wiped out,” he said.
To limit the real estate contagion, central bank Governor Yi Gang and other officials told financial institutions to co-operate with governments to “maintain the steady and healthy development of the real estate market” while safeguarding homeowners, according to a statement by the People’s Bank of China last week.
The regulators asked banks to refrain from cutting off funding to developers all at once, according to a person familiar with the matter. Lenders should continue supporting projects under construction and approve mortgages for buyers qualified for presales, the person said.
The moves by Beijing pushed developer stocks higher on Thursday, with the CSI 300 Real Estate Index rising 1.2 per cent, for a third-straight gain. Markets were closed Friday for a holiday in Hong Kong and China.
“Given the gigantic size and importance of the sector to the economy, we expect China to make every effort to avoid a hard landing, especially at a time when the economy is facing heightened uncertainty amid a pandemic,” Moody’s analyst Christina Zhu wrote in a September 30 note.
China has plenty of experience managing collapses of conglomerates like Evergrande. HNA Group’s restructuring this year may be a model, according to Citigroup researchers. Following the HNA example, Beijing would likely step in, break up Evergrande’s businesses and sell assets to strategic investors. Under this scenario, bondholders would take a severe haircut and equity investors would be all but wiped out. Even after last week’s gains, Evergrande’s stock has tumbled 80 per cent this year.
So far, China has been able to limit Evergrande’s contagion. Standard & Poor’s said it sees little evidence of a broader spillover into other parts of the financial markets, with impact confined to single-B rated developers.
Citigroup expects some fallout from Evergrande, prompting a cut in its 2022 economic growth forecast to 4.9 per cent from 5.5 per cent. The challenge for China is to support the property sector without stoking the type of overheating that it’s been working for years to curb.
President Xi Jinping’s mantra is that housing is for living not for speculating, and Beijing wants to avoid another run up in prices that would exacerbate inequality in the world’s second-largest economy. Still, inflicting pain on Evergrande and its investors also sends a signal that China doesn’t condone massive accumulations of debt and the moral hazard that often comes with it.
“Regulators will make sure no systemic financial crisis will happen, which is their bottom line,” said Zhou Hao, senior emerging markets strategist at Commerzbank in Singapore. “At the same time, they will punish developers that are highly leveraged.”
Bondholders meanwhile are bracing for a massive haircut from any restructuring. S&P said last week it expects a “very high chance of default” for Evergrande given its liquidity situation and $300bn in total liabilities. The company has likely missed two coupon payments on dollar bonds in the past two weeks, and faces a $260 million maturity Monday on a note sold by a related company known as Jumbo Fortune Enterprises.
With Evergrande’s main offshore bond trading at about 27 cents on the dollar, investors like Marathon have little prospects of being made whole, they’re betting instead on some trading gains in the overhaul.
“We don’t know what that recovery value is but we’re getting close to the point where it now makes sense” to buy, Richards said in a Bloomberg Television interview.
Mohammed bin Zayed Majlis
England World Cup squad
Eoin Morgan (capt), Moeen Ali, Jofra Archer, Jonny Bairstow, Jos Buttler (wkt), Tom Curran, Liam Dawson, Liam Plunkett, Adil Rashid, Joe Root, Jason Roy, Ben Stokes, James Vince, Chris Woakes, Mark Wood
Mohammed bin Zayed Majlis
UAE currency: the story behind the money in your pockets
Infiniti QX80 specs
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Power: 450hp
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Zayed Sustainability Prize
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
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Why are asylum seekers being housed in hotels?
The number of asylum applications in the UK has reached a new record high, driven by those illegally entering the country in small boats crossing the English Channel.
A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.
Asylum seekers and their families can be housed in temporary accommodation while their claim is assessed.
The Home Office provides the accommodation, meaning asylum seekers cannot choose where they live.
When there is not enough housing, the Home Office can move people to hotels or large sites like former military bases.
The years Ramadan fell in May
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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Zayed Sustainability Prize
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Mohammed bin Zayed Majlis
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Engine: 4.0-litre flat-six
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Killing of Qassem Suleimani
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
PFA Premier League team of 2018-19
Allison (Liverpool)
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Virgil van Dijk (Liverpool)
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Raheem Sterling (Manchester City)
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GULF MEN'S LEAGUE
Pool A Dubai Hurricanes, Bahrain, Dubai Exiles, Dubai Tigers 2
Pool B Abu Dhabi Harlequins, Jebel Ali Dragons, Dubai Knights Eagles, Dubai Tigers
Opening fixtures
Thursday, December 5
6.40pm, Pitch 8, Abu Dhabi Harlequins v Dubai Knights Eagles
7pm, Pitch 2, Jebel Ali Dragons v Dubai Tigers
7pm, Pitch 4, Dubai Hurricanes v Dubai Exiles
7pm, Pitch 5, Bahrain v Dubai Eagles 2
Recent winners
2018 Dubai Hurricanes
2017 Dubai Exiles
2016 Abu Dhabi Harlequins
2015 Abu Dhabi Harlequins
2014 Abu Dhabi Harlequins
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
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Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
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UAE currency: the story behind the money in your pockets
The specs
Engine: 2.0-litre 4-cyl turbo
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Transmission: 6-speed auto
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MO
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Killing of Qassem Suleimani
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
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Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
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The years Ramadan fell in May
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Plan to boost public schools
A major shake-up of government-run schools was rolled out across the country in 2017. Known as the Emirati School Model, it placed more emphasis on maths and science while also adding practical skills to the curriculum.
It was accompanied by the promise of a Dh5 billion investment, over six years, to pay for state-of-the-art infrastructure improvements.
Aspects of the school model will be extended to international private schools, the education minister has previously suggested.
Recent developments have also included the introduction of moral education - which public and private schools both must teach - along with reform of the exams system and tougher teacher licensing requirements.
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
Killing of Qassem Suleimani
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The years Ramadan fell in May
Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
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