Chinese Stocks Give Up 2015 Gains, Plunge On Kaisa Default Fears

Tyler Durden's picture

The last session in China on Friday provided an epic roller-coaster as exuberant retail BTFD'ers met their match with fading inflation and surging default risk concerns. The Monday session has opened to more of the same - with the Shanghai Composite opening down another 1.3% and erasing all the year's gains. As Shanghaio Daily reports, the Chinese property developer Kaisa Group Holdings (that we have discussed in detail here and who's next here) failed to repay a US$26 million bond coupon, making it the first Chinese property firm to default on dollar bonds.



Friday's plunge in stocks continues...


As Shanghai Daily reports, Chinese property developer Kaisa Group Holdings Ltd failed to repay a US$26 million bond coupon on Thursday, making it the first Chinese property firm to default on dollar bonds.

The market had speculated that Kaisa would likely default on this 2020 HSBC bond coupon after it defaulted on an earlier HSBC facility in December. A CreditSights report written on Wednesday said that Kaisa will have a 30-day grace period to resolve the current situation if it were to default.


The resignation of Kaisa’s Chairman Kwok Ying Shing on December 31 triggered a default on the HK$400 million (US$51.6 million) facility from HSBC Holdings Plc. Chief Financial Officer Cheung Hung Kwong and Vice Chairman Tam Lai Ling had also quit earlier.


Shenzhen-based Kaisa declined to comment on its debt problem but warned last week in a statement that it may default again after it failed to repay the HSBC debt.


Meanwhile, authorities blocked four projects of Kaisa in Shenzhen, Guangdong Province, on suspicions that Kwok was related to a local corruption case.


Kaisa has dealings totaling 14 billion yuan (US$2.3 billion) with 11 financial institutions, and at least three of them have applied to a court in Shenzhen yesterday to seize Kaisa properties, said Wind Information Co.

As we concluded previously, (away from the exuberant equity markets)...

“Everyone is rethinking risk right now and so are we,” said Singapore-based Brayan Lai, the head of research and money manager at One Asia Investment Partners. The credit hedge fund has about $200 million of assets. “There are uncertainties about Chinese companies” amid concerns over Greece and U.S. debt markets, he said.

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It seems stocks are catching on fast...

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Bloppy's picture

Don't expect to see a thing about this on CNBS.


Greta Van Susteren apologizes to France: 'Obama blew it'

Arius's picture

why monsier Kerry did not attend?


he speaks french ... or rather pretend to

joego1's picture

That travel advisory thing.. You know to dangerous

booboo's picture

"There are uncertainties about Chinese companies”

Gee, Woo would have thunk

NoDebt's picture

"authorities blocked four projects of Kaisa in Shenzhen, Guangdong Province, on suspicions that Kwok was related to a local corruption case."

It's like a holding penalty in the NFL.  They could call one on every play if they wanted to.  I think I read somewhere else this company reported having something like almost a billion in the kitty 6 months ago.  Wonder where that went.  Oh, yeah.  It's CHINA.


Proofreder's picture

It's China ...

After 45 minutes, you want MOAR YEN

wash dishes, rinse, and repeat ...

Oldwood's picture

Why repay dollar debts when we can simply print more?

Do they really think no one notices that ALL government debts are paid with printed money? Why should anyone else have to pay?

disabledvet's picture

Because that has failed too.

disabledvet's picture

Visit my blog "free money and its malcontents" for more info.


In it I discuss the perturbations of "free stuff" and "freedumb" and how indeed "the more you steal the more the people you steal from give you more.  Just because."


I also have a new work out entitled "God forbid if there's real money here!" and other ruminations.

Fake money, funny money, globaloney...its all there plus a free sample of weed for the totally disinterested.

buzzsaw99's picture

the squid would love to ipo some moar chinee fraudcaps bitchez

cnmcdee's picture

Gee Bob.  How about they build another 15 cities that none of the peasant labor that built them can afford to live in.?


Howree clow! Vee R Fked now!!

db51's picture

You Wong. We be green by Toosday.

cnmcdee's picture

I wouldn't be surprised if they paint green over the arrows on the market screens so no red can be shown.


RagnarDanneskjold's picture

This may also be a reason: over the weekend, Chinese media reported that more than 100 large factories in Donnguan may shut.

China's Low Cost Manufacturers Run Out of Time; Hundreds of Factories May Close in Dongguan
TheFourthStooge-ing's picture

Ah, ah, recessionary much the dangdang, perish thought.

tarabel's picture



China's rise was fueled with a massive injection of western technology and capital. Once Chinese companies started helping themselves to the trade secrets of their 49% owned foreign partners and going into business as competitors as well as partners, said foreign partners stopped providing any more advanced technologies and started building assembly lines in other places.

The net result is that China has already hit its apogee and is about to learn what fun it is to live in a rust belt.

Signs to look for:

More bellicose nationalist rhetoric.

Show trials.

Relaxed regulations on foreign investment in China.

db51's picture

Did you mean Dong Juan.   I believe I saw that porn video.

TheFourthStooge-ing's picture

I don't think it's the porn video, I think it's the book:

The Teachings of Dong Juan: A Yuanqi Way of Knowledge by Xiarlos Xastanegong.

Ewtman's picture

S&P 500

In the aggregate, people are subconsciously losing their faith, trust and interest in the stock market. Soon, they will begin to lose their money too.




This past week’s three and a half day rally, sparked by positive Fed-speak and glowing unemployment numbers, will be quickly forgotten and a new round of economic concerns will be raised by the pundits and analysts about why the markets are selling off. Look for the D-word, deflation, to be reluctantly uttered as awareness is raised that prices and wages are declining globally. It is becoming more and more difficult to deny the obvious.

Katastrofenhausse's picture

Kaisa?!? I thought we beat the Kaisa when my great grandpappy fought the Germans in World War One, damn those tricky Krauts. Now put some moar sportsball on the teevee damnit

-sincerely The Muppets of Murica

joego1's picture

Blame it on the VP "Dam Lie Ing".

SheepDog-One's picture

When even Chinese gubmint propaganda can't cover for it any more, you know the shitwinds are a'blowin.

TheFourthStooge-ing's picture

That means it could bring a shit tornado to Oz, right Mr. Lahey?

SheepDog-One's picture

That's right Randinator.....They're grasping at shit ropes, greasy slippery shit ropes.

Chad_the_short_seller's picture
Chad_the_short_seller (not verified) Jan 11, 2015 10:31 PM

Just a very curious question here..... Does USA have the balls to sanction China since they pretty much fully support Russia??

q99x2's picture

The USA no longer exists. Everyone is a contractor in a group sometimes referred to as the USA.

BlussMann's picture

I'll bet she's doing online porn like those chat lines in the 90's , probably 3.99 an hour.

Jano's picture

Chinese stocks are rigged by chinese gov.

who cares about their values?

only a gambler would buy it. The same applies for NYSE