The management of the Chinese real estate giant "Evergrande Group", which has huge debts, was the factor that caused the stock prices in various parts of the world to drop significantly, such as the stock markets in Europe and the United States on the 20th and the Tokyo stock market on the 21st after the holidays. It's getting worse.
Interest-bearing debt exceeded 9 trillion yen in Japanese yen, due to concerns that it would affect the Chinese economy as a whole.
What kind of company is the "Evergrande Group" that caused the stock price to fall this time?
He also summarized the so-called "bubble", the situation surrounding overheating China's real estate speculation, and its impact on Japan.
Business expansion beyond real estate such as soccer clubs
The Evergrande Group, which was founded in 1996, has grown rapidly due to the development of condominiums through aggressive investment, and was listed on the Hong Kong Stock Exchange in 2009.
We have been developing real estate business all over China.
With approximately 200,000 employees, the property sales area for the year 2020 was approximately 80 million square meters, the second largest in the industry.
The company is known for expanding its business beyond real estate, and in addition to businesses such as healthcare, drinking water, and EV = electric vehicles, it also operates the professional soccer club "Guangzhou Hengda" and now "Guangzhou FC". We are also entering the market.
However, as a result of continuing to expand our business by relying on loans and issuance of corporate bonds, debt will swell and become a burden on management.
As of the end of June, interest-bearing debt was 570 billion yuan and Japanese yen was more than 9.7 trillion yen, and total debt was 1.96 trillion yuan and Japanese yen was about 33 trillion yen.
And the Chinese government was wary of overheating in the real estate market and tightened regulations, which worsened the profitability of the real estate business and raised concerns about cash flow.
Recently, construction of properties under construction has stopped in various places and payments to business partners have been delayed, and complaints have been posted on the Internet that even though I bought an apartment, there is no prospect of completion and I can not move in. ..
The group also issues financial products that promise high yields of around 10% per annum, of which about 680 billion yen is reported to have reached maturity, and will be redeemed in the middle of this month. There was also a turmoil in which individual investors rushed to the head office in search of it.
The Evergrande Group has a policy of urgently improving its finances by selling EV-related assets amid the deterioration of management, but so far it has not progressed as expected.
"Deadline for interest payments on large amounts of corporate bonds toward the end of the year"
Amid growing concerns about the company's cash flow, there has been some turmoil on the 13th of this month, with individual investors rushing to the headquarters to redeem the financial products sold by the group.
According to market participants, the deadline for interest payments on corporate bonds totaling approximately 13 billion yen in Japanese yen will be reached on the 23rd of this month, and the deadline for interest payments on large amounts of corporate bonds is approaching toward the end of the year.
There is growing concern about paying such huge interest payments, and if the company goes bankrupt due to a financial stalemate, it could have a significant impact on employees and the companies with which they do business.
In addition, if the Evergrande Group sells its properties in a hurry to raise funds, there is concern that the fall in real estate prices will hurt other companies.
It is also warned that the number of non-performing loans of financial institutions, which have a lot of real estate-related loans, will increase, leading to weakening of management strength.
Construction sites that have been suspended are also "impact of lack of funds"
In the suburbs of Guangzhou, Guangdong Province, one of the bases of the Evergrande Group, high-rise condominiums and commercial facilities are being developed, centered on soccer fields, on a vast land of 1.5 million square meters.
However, large construction machines are not working at the site, and according to the people involved in the construction company, the work has been suspended for nearly a month, and there are discussions between the local government and the construction company about the future. It means that it is.
A security officer at the site, who was dispatched by the city government, said, "The construction has stopped because of the lack of funds of the Evergrande Group."
A construction worker at the site said, "I'm absent from work now. I can't see when it will resume and when it will be completed."
In the showroom of the condominium near the site, materials showing that many rooms were sold were displayed.
The condominium is scheduled to be completed next year, and a man who bought it said, "I'm not worried about a big city like Guangzhou because there are contractors who will take over the construction no matter what. Let's do it. "
Some point out that the Chinese real estate market “bubble” continues to soar
While the real estate market has a wide base and has been a driving force for the Chinese economy, speculative movements in anticipation of rising house prices have also occurred, and concerns about the so-called bubble have been pointed out for many years.
House prices are skyrocketing in major cities, rising 47.9% in Beijing, 56% in Shanghai and 64.4% in Guangzhou compared to five years ago as of December last year.
On the other hand, in some local cities, the construction rush that does not meet demand has resulted in inventories that cannot be bought by buyers.
Since last year, the Chinese government has been worried that the real estate market will overheat and prices will continue to rise. I am.
Specifically, in August of last year, we presented a standard called "three red lines" that stipulates that real estate agents should keep their debts to a certain scale, and introduced borrowing restrictions for companies that could not comply. Did.
In addition, since January, we have set an upper limit on the amount of mortgage loans to financial institutions, and these regulations have suppressed the growth of real estate development investment to a certain extent.
The deterioration of the Evergrande Group's management this time was affected by the difficulty in borrowing due to such tightening of regulations, and in the middle of last month, the financial authorities provided guidance to improve the financial condition.
The response of the Chinese authorities will be the focus of the future management of the Evergrande Group.
There is a view among market participants that the Chinese authorities will take some measures to curb the impact, as it is necessary to avoid a significant impact on the real estate and financial markets.
On the other hand, in China, the problem of excessive investment and debt has expanded with the recognition that the government will not bankrupt large companies, so this time we will take strict measures against the Evergrande Group. There is also a view that it may be.
In addition, as Xi Jinping's leadership has set out to correct disparities under the goal of "joint wealth" that enriches all people, the background to the tightening of regulations in the real estate market is that housing prices are rising further and people It has been pointed out that there is also an aim to prevent an increase in unfairness among the people.
Does "GPIF", which manages public pension reserves, hold stocks in Japan?
GPIF = "Government Pension Investment Fund," which manages public pension reserves, is a stock of the Chinese real estate giant "Evergrande Group," whose management has deteriorated as of the end of March. We hold a total of more than 9.6 billion yen in corporate bonds.
As of the end of March, the total amount of reserve funds managed by GPIF amounted to approximately 186,160 billion yen.
Of these, the amount of investment in the Evergrande Group and its affiliated companies as of the end of March was valued at market value, with stocks amounting to 3,765 million yen and corporate bonds amounting to 5,907 million yen, totaling approximately 9,673 million yen. Is to become.
GPIF is investing in funds linked to stock indexes in overseas stock markets, and it is said that the stocks and corporate bonds of the Evergrande Group were included as investment targets.
GPIF states that "the holding status of individual stocks is announced only at the end of the fiscal year and cannot be commented on" regarding the current holding status and investment performance of the Evergrande Group's stocks and corporate bonds.