China’s real estate sector angered investors this week as the country’s second largest real estate developer missed a deadline to pay its overseas bondholders. Evergrande, which has built residences in all regions of China, now has 30 days to pay off the coupon payment before it defaults.
Investor uncertainty about China has increased since regulators closed the Blackstone Group’s $ 3 billion deal to acquire real estate developer Soho China amid political crackdown on wealthy executives including billionaire Soho China founders Pan Shiyi and Zhang Xin, have burst.
Blackstone shares fell 6.4 percent this week, partially rebounding from a Monday sell-off triggered by Evergrande’s debt troubles. Global private equity firm KKR was down 6.7 percent this week, while Apollo Global Management nearly struggled to recover, shedding 0.6 percent for the week.
Stock prices closed about 20 percent above their pre-pandemic highs for Blackstone and Apollo and a remarkable 80 percent for KKR on Friday.
US real estate companies were mixed this week. Broader markets offset Monday’s sell-off caused by a perception that stocks were overvalued relative to corporate earnings to change the week little. The Federal Reserve also announced this week that it would be scaling back its bond purchases this year, which would likely weaken its support for the country’s mortgage lending market.
The Real Estate Select Sector Index, which corresponds to the share price performance of listed real estate companies, fell 1 percent this week. The S&P Homebuilders ETF rose 1.5 percent this week. Meanwhile, the S&P 500 index remained little changed, gaining 0.5 percent, the Nasdaq ended the week 3.3 percent higher, and the Dow Jones Industrial Average rose 2.4 percent.