Sign in
China’s economy is edging closer to a potential third wave of bond defaults, on the back of sluggish economic growth, tight government policies and high financing costs according to the latest report from S&P Global. This scenario, expected as early as next year, would mark the third wave of corporate defaults in 10 years, signaling that the government’s current directives might be “creating distorted incentives in the economy,” Charles Chang, greater China country lead for corporates at S&P told CNBC.
China has had “extremely few defaults” in the past year, with the corporate bond default rate plummeting to 0.2% in 2023, marking its lowest level in over eight years and significantly below the global average rate of around 2.6%, according to S&P data.
Unabating real estate woes: China’s efforts to curb financial risks and limit real estate developers’ reliance on the bond market for growth had adverse effects, dragging the real estate sector into a slump, which in turn impacted the overall economy.
The caveat: “Policies aimed at reining in excessive leverage drove the two default waves so far. More policies with similar aims, scale, and effects may lead to the next wave of defaults,” Chang said in the report.
|
TASI |
12,355.7 |
-1% (YTD: +3.2%) |
|
|
MSCI Tadawul 30 |
1,548.6 |
-1% (YTD: -2.1%) |
|
|
NomuC |
26,326.1 |
-1.4% (YTD: +7.3%) |
|
|
USD : SAR (SAMA) |
3.75 Sell |
3.75 Buy |
|
|
Interest rates |
6.5% repo |
5.5% reverse repo |
|
|
EGX30 |
25,917.6 |
-3.2% (YTD: +4.1%) |
|
|
ADX |
9,045.0 |
-0.1% (YTD: -5.6%) |
|
|
DFM |
4,167.3 |
0% (YTD: +2.7%) |
|
|
S&P 500 |
5,061.9 |
-0.2% (YTD: +6.1%) |
|
|
FTSE 100 |
8,036.7 |
-0.1% (YTD: +4.5%) |
|
|
Euro Stoxx 50 |
4,983.6 |
-0.5% (YTD: +11.2%) |
|
|
Brent crude |
87.8 |
-0.7% |
|
|
Natural gas (Nymex) |
1.7 |
-5.7% |
|
|
Gold |
2,345.5 |
+0.2% |
|
|
BTC |
64,805.8 |
-2.9% (YTD: +137%) |
THE CLOSING BELL: TADAWUL-
The TASI fell 1% yesterday on turnover of SAR 8.5 bn. The index is up 3.2% YTD.
In the green: AlRajhi Takaful (+9.9%), Al Sagr Ins. (+6.4%) and First Mills (+5.6%).
In the red: AlBaha (-7%), NCLE (-6%) and ARDCO (-5.9%).
THE CLOSING BELL: NOMU-
The NomuC fell 1.4% yesterday on turnover of SAR 26.9 mn. The index is up 7.3% YTD.
In the green: Osool and Bakheet (+12.1%), APICO (+7.4%) and Lana (+3.6%).
In the red: Jahez (-5.9%), Al Hasoob (-3.6%) and Aqaseem (-3.4%)
CORPORATE ACTIONS-
#1- Shareholders of Alinma Bank approved a 25% capital hike to SAR 25 bn through capitalizing SAR 5 bn from retained earnings, it said in a regulatory filing (pdf). The capital hike is intended to strengthen the bank’s financial position to help it achieve strategic objectives, it added.
#2- Al Sagr Cooperative Ins. obtained the Capital Market Authority (CMA) approval to raise its capital by SAR 160k through a rights issue, according to a statement by the CMA. The offering price and number of shares to be offered will be determined by the ins. company after the market closes on the same day as the EGM meeting. The CMA’s approval comes months after Al Sagr’s board recommended increasing capital to SAR 300 mn through a SAR 160 mn rights issue.
#3- Shareholders of Riyadh Cement have approved a dividend of SAR 90 mn at SAR 0.75 per share for H2 2023, it said in a disclosure to Tadawul.
#4- Shareholders of real estate developer Riyadh Development approved a dividend of SAR 88.9 mn at SAR 0.50 per share for H2 2023, it said in a disclosure to Tadawul.
