With just a couple of days remaining of another US Dollar-denominated bond repayment due at China’s real-estate giant Evergrande, the world’s 122nd-largest group, the People’s Bank of China (China’s Central Bank) had issued a statement saying that the Central Bank would safeguard consumers exposed to a beleaguered Chinese housing market through an influx of more liquidities into the country’s financial system, as local Government of Shenzhen had launched a probe into the wealth management arm of Evergrande, which went default on last Thursday after missing out a bond repayment of a roughly $88 million.
If truth is to be told, the long-hailed Chinese borrower and builder, Evergrande, which has over $305 billion worth of properties outstanding, mostly to retail clients, aside from another bond repayment due on next Wednesday, turned to an epitome of cenotaph that had reportedly offering discounted properties in exchange of bond repayments, suggesting a critical glitch in Evergrande’s wealth management system which had already begun to sent shockwaves into global equity markets.
Meanwhile, in a letter to Evergrande investors seen by a press agency reporter, Shenzhen Financial Regulatory Bureau had said, “Relevant departments of the Shenzhen government have gathered public opinions about Evergrande Wealth and are launching a thorough investigation into related issues of the company”.
China’s Central pledges to safeguard housing market consumers
On top of that, without mentioning Evergrande, the People’s Bank of China had said in a statement published on its website on Monday that the PBOC would protect consumers exposed to housing market while yielding a more flexible, targeted and precise monetary policy.
In tandem, expressing a cautious optimism over PBOC’s latest remark to protect the interests of housing market investors, an executive at T. Row Price’s Asia credit bond strategy unit, Sheldon Chan said followed by the Central Bank statement, “We expect that any impact to the banking system will be manageable and that the government will instead focus on the social fallout of unfinished housing units”.