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On December 3, China Evergrande Group disclosed an announcement that it may not be able to perform its guarantee obligations. The Guangdong Provincial People’s Government stated that it immediately interviewed Xu Jiayin, the actual controller of China Evergrande Group. At the request of Evergrande Real Estate Group Co., Ltd., the People’s Government of Guangdong Province agreed to send a working group to Evergrande Real Estate Group Co., Ltd. Subsequently, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the Ministry of Housing and Urban-Rural Development responded to the Evergrande issue.
Analysts believe that the Evergrande issue is a case-by-case risk, and a critical step has been taken to deal with it. This is conducive to further comprehensive inspection of Evergrande’s overall debt scale and effective risk reduction; it is conducive to reducing the uncertainty risks faced by upstream and downstream enterprises and related real estate companies; it is conducive to safeguarding the legitimate rights and interests of all parties and maintaining social stability.
The Evergrande issue is a case-by-case risk with limited impact on the real estate industry and financial market
Based on the responses of relevant departments, Evergrande’s problem is a case-by-case risk. At present, my country’s real estate industry has maintained a healthy development, and the financing channels of real estate companies in the bond market have remained smooth and orderly.
Information from the People’s Bank of China, the China Securities Regulatory Commission and other departments shows that Evergrande Group’s poor management and blind diversification expansion eventually led to an outbreak of risks. Most real estate companies stick to their main business and operate steadily.
What impact will the Evergrande issue have on the financial market? A spokesperson for the China Banking and Insurance Regulatory Commission said that financial debt accounted for about one-third of the total debt of Evergrande Group, the structure is relatively scattered, and the amount of financial investment is small. Therefore, this will not have any negative impact on the normal operation of my country’s banking and insurance industry.
The relevant person in charge of the China Securities Regulatory Commission pointed out that at present, the A-share market is generally operating smoothly, with strong resilience and high activity, the exchange bond market default rate has remained at a low level, and the operating financial indicators of listed housing-related companies and bond issuers are generally healthy. , The spillover impact of Evergrande Group’s risk events on the stable operation of the capital market is controllable.
Since the beginning of this year, despite the increasing risks and challenges at home and abroad, China’s economy has maintained a sustained and stable recovery, showing good development resilience. The financial system strictly adheres to the bottom line of safety, and the good posture of contributing to the stable operation of the economy has not changed. This will provide a solid foundation for the safe handling of individual risks.
– my country’s GDP in the first three quarters increased by 9.8% year-on-year, and it is expected that the annual economic growth will exceed the expected target.
– The prudent monetary policy maintains continuity, stability and sustainability, and the total credit volume also maintains steady growth. In the first three quarters, RMB loans extended by financial institutions to the real economy increased by 16.83 trillion yuan, an increase of 140 billion yuan over the same period last year.
-The capital market has a good momentum of deepening reform and opening up. Major reforms such as the establishment of the Beijing Stock Exchange have been implemented successively, and the basic system of the capital market has been continuously improved. Since the beginning of this year, foreign investors have accumulated a net inflow of over 280 billion yuan through QFII, Shanghai-Shenzhen Stock Connect and other channels. The revenue and net profit of listed companies in the first three quarters increased by 23.3% and 26.0% respectively year-on-year.
The reasonable financing needs of the real estate industry are met and a virtuous circle of finance is gradually taking shape
Since the Evergrande issue was exposed, all parties have paid close attention to the financing situation of real estate companies. So what is the current situation?
According to the relevant person in charge of the People’s Bank of China, the short-term risks of individual real estate companies will not affect the normal financing function of the medium and long-term market. Recently, domestic real estate sales, land purchases, financing and other behaviors have gradually returned to normal. Some Chinese real estate companies have begun to repurchase overseas bonds, and some investors have also begun to buy US dollar bonds of Chinese real estate companies.
“Recently, private real estate companies such as Logan Holdings, Longfor Development, and New Hope Real Estate have started the issuance of corporate bonds and asset securitization.” According to the person in charge of relevant departments of the China Securities Regulatory Commission, the regulatory authorities have always focused on the effective use of the financing function of the exchange bond market. , Support private enterprises, especially private real estate enterprises that have been affected by individual risk events in the recent past, to raise reasonable and normal rolling financing, and keep bond financing channels open.
In addition, the person in charge of the relevant department of the China Securities Regulatory Commission also stated that it will support the issuance of bonds by high-quality real estate companies, and the funds will be used for mergers and acquisitions of insurance companies.
How can the bancassurance industry better meet the reasonable financing needs of the real estate industry in the future? A spokesperson for the China Banking and Insurance Regulatory Commission stated that the China Banking and Insurance Regulatory Commission will guide bancassurance institutions to provide financial services to the real estate and construction industries on the premise of implementing the prudential management of real estate finance.
“At this stage, it is necessary to focus on meeting the mortgage needs of first homes and improved housing, reasonably issuing real estate development loans and M&A loans, and increasing support for affordable rental housing based on different localities.” said a spokesperson for the China Banking and Insurance Regulatory Commission.
Evergrande’s problem risk changes from uncertainty to definite disposal will adhere to the principles of marketization and rule of law
The People’s Government of Guangdong Province stated that at the request of Evergrande Real Estate Group Co., Ltd., in order to effectively resolve risks, protect the interests of all parties, and maintain social stability, the People’s Government of Guangdong Province agreed to send a working group to Evergrande Real Estate Group Co., Ltd. to supervise and promote enterprise risk management. Work, supervise and effectively strengthen internal control management and maintain normal operations.
This means that the risk of Evergrande’s problem has changed from uncertainty to certainty. So, what about the Guangdong Provincial People’s Government sending a working group to Evergrande Real Estate? Relevant legal persons believe that the prerequisite for the government working group to enter the venture enterprise is based on the principle of enterprise voluntariness. Enterprises take the initiative to apply for the presence of government working groups for guidance and assistance. The government forms a working group to actively respond to corporate needs to help companies get out of trouble and resolve risks. It belongs to the government’s responsibility to maintain social stability and complies with relevant laws and regulations.
In addition, there is a precedent for the government to help and guide companies when they are in trouble. Before the HNA Group’s reorganization case entered the judicial process, according to the request of HNA Group, the Hainan Provincial People’s Government had set up a working group to station.
A person from the Ministry of Housing and Urban-Rural Development said that the Guangdong Provincial People’s Government sent a working group to Evergrande, which is conducive to Evergrande’s risk resolution, it is conducive to Evergrande’s guarantee of the property, and it is conducive to protecting the legitimate rights and interests of home buyers. The head of the relevant department of the China Securities Regulatory Commission said that this is also conducive to stabilizing expectations and confidence in the healthy development of the capital market and the real estate market.
How to protect the legitimate rights and interests of domestic and foreign investors and related home buyers in the process of risk disposal?
The relevant person in charge of the People’s Bank of China stated that relevant authorities will continue to maintain communication with relevant regulatory authorities in overseas markets, urging overseas bond-issuing companies and their shareholders to strictly abide by market discipline and rules, and to properly handle themselves in accordance with the principles of marketization and rule of law. Actively fulfill the statutory debt repayment obligations. The relevant departments will provide support and facilitation under the current policy framework for the repayment of funds remitted by enterprises and the repurchase of overseas bonds.
A spokesperson for the China Banking and Insurance Regulatory Commission said that there will be no change in the principled position of the financial regulatory authorities to protect the legitimate rights and interests of consumers, investors and operators in accordance with the law. China’s financial marketization, rule of law, and international reform and opening will not change in any way.
“The government’s intervention in accordance with laws and regulations is conducive to effective management and control of risk losses and reducing the uncertainty in the process of risk disposal.” Liu Hongyu, professor of the Department of Construction Management of Tsinghua University and director of the Institute of Real Estate Research, believes that it can be expected that in the subsequent risk disposal work, The work of the working group and relevant departments will follow international practices, in line with the principles of marketization and rule of law, and handle the interests of home buyers and investors in an open, transparent and fair manner. (Reporters Liu Hui, Wang Pan, Wang Youling)