Evergrande given extension on payment

Evergrande secures debt payment extension

As I write financial provider REDD is breaking a story that Evergrande has been granted an extension to its coupon payment due this Saturday. There has been no official announcement as yet and its shares briefly traded down over 10% this morning when trading resumed. The Hang Seng, where it is listed, remains over 1.0% lower for the day despite the news. Mainland China markets, however, have drifted back into the green with the Shanghai Composite 0.05% higher and the CSI is up 0.15%. Realistically, ahead of the central committee meeting in early November, I expect China’s “national team” to be on the bid on mainland exchanges should equity prices dip.

Overnight US equities finished mixed although the strong procession of quarterly earnings keeps the bullish fires alive. The S&P 500 finished 0.37% higher but healthcare dragged the Nasdaq to a fall of 0.05%, while the Dow Jones outperformed, rising 0.45%. Momentum has waned in Asia though with futures on all three indexes falling by around 0.20%, adding to what is a sombre mood in Asia generally.

Nerves around Evergrande and the China property sector appear to be weighing on sentiment in Asia today, with a weak Nasdaq performance having a negative impact on the closely correlated North Asia heavyweights. The Nikkei 225 has slumped by 1.90% with concerns increasing about the combination of a weak yen and rapidly rising energy prices. The ongoing eruption of Mt Aso and election campaigning, with some polls suggesting a close race, also seem to be prompting Japan investors to head to the sidelines. The Kospi is 0.30% lower while Taipei is down 0.05%.

Singapore has edged 0.15% lower with Kuala Lumpur falling 0.45% after yet another glove manufacturer had products seized by US Customs over labour practises. Jakarta is just 0.05% lower with Bangkok creeping 0.10% higher. Australian markets, with one eye on weaker US futures, Evergrande nerves and easing commodity prices is trading sideways. The ASX 200 and All Ordinaries are hovering near unchanged for the day.

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