Chinese real estate giant China Evergrande has lost a lot of its market value since the new year. It also affects the global government pension fund.
China Evergrande, one of the world’s largest and most indebted real estate developers, fell sharply in Hong Kong on Monday. At the close of trading, it lost another 10.2 percent of the company’s market value.
Since the new year, the exchange rate of the Evergrande has fallen by nearly 84 percent, to the current exchange rate of about 33.6 billion HK dollars, equivalent to about 38 billion kroner.
This is bad news for Evergrande founder and chairman Xu Jianyi, who owns 71% of the company.
Big paper loss
But it could also be bad news for a more modest shareholder, with more local roots. At the turn of the year, the global government pension fund, known as the Oil Fund, owned just under 0.21 percent of China Evergrande.
In the new year, Norwegian Post was valued at 462.5 million Norwegian kroner, according to Norges Bank Investment Management (NBIMwho manages the fund.
Assuming the wallet remains unchanged, the price drop corresponds to a paper loss of NOK 387.5 million.
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Indoors since 2010
However, it is not known what levels the Petroleum Fund has attained, nor whether the Fund has increased or decreased its holdings since accession.
The NBIM website notes that the Petroleum Fund has been exposed since 2010.
The property position in China Evergrande was estimated at nearly NOK 150 million at the end of 2016, and nearly NOK 730 million at the end of 2019, according to the site.
Ownership status was incorporated under Evergrande Real Estate Group Ltd, prior to the name change in 2016.
The NBIM wallet will debut with a value of about NOK 30 million, at the end of 2010. After that, the item will rise to approximately NOK 217 million by New Year 2015.
NBIM also reports that the fund is early in the year Not Direct exposure to Evergrande debt in the fixed income (bond) market.
The issue continues below the image
Evergrande has debts equivalent to more than 2,500 billion NOK and about 1.5 million homes are under construction in more than 200 cities.
The company notified in end of August They were in danger of not being able to meet their loan obligations. This creates uncertainty, among other things, about the interest repayment of the company’s foreign bond loans, which mature on Thursday of this week.
Credit rating agency Fitch has responded by downgrading Evergrande to Double-C, noting that some form of default “looks likely,” according to the financial times.
Later, Moody’s colleagues lowered the rating for the third time in as many months, warning that creditors had “low odds” of getting paid, should a default occur, according to the Financial Times.
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Don’t be afraid of bankruptcy
The market fears that Evergrande’s problems may extend to the rest of China’s real estate sector, which is estimated to account for somewhere between 15 and 30 percent of the economy.
Pål Ringholm, director of credit analysis at Sparebank 1 Markets, recently pointed out to E24 that Evergrande was the world’s most valuable real estate company just three years ago.
Today, the market is 100 percent classified as technical bankruptcy, he says.
– I think the Chinese authorities will try to avoid the Lehman moment (bankruptcy, editor’s note) and will try to ensure debt restructuring. Ringholm says the Chinese will not let the biggest banks go bankrupt.
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up to 1000 billion
As of Monday, the petroleum fund was valued at over 11,900 billion NOK.
At the beginning of the year, the portfolio amounted to 10,900 billion NOK, spread over 11,200 investments in 72 countries. Equity investments then amounted to nearly NOK 8,000 billion, spread across more than 9,100 companies.
NBIM does not wish to comment on the matter other than referring to the inventory on the fund’s website.
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