China’s real estate sector rankled investors this week as the country’s second largest property developer missed a deadline to pay its overseas bondholders. Evergrande, which has built residences in every one of China’s regions, now has 30 days to cure the coupon payment before it defaults.
Investor uncertainty over China has grown since regulators scuttled Blackstone Group’s $3 billion deal to acquire property developer Soho China amid a political crackdown on wealthy executives, including billionaire Soho China founders Pan Shiyi and Zhang Xin.
Blackstone shares fell 6.4 percent this week, partially recovering from a selloff Monday sparked by Evergrande’s debt problems. Global private equity firm KKR fell 6.7 percent this week, while Apollo Global Management nearly eked out a recovery, its share price ending the week down 0.6 percent.
Share prices closed Friday about 20 percent above their pre-pandemic peak for Blackstone and Apollo, and a remarkable 80 percent for KKR.
U.S. real estate companies were mixed this week. Broader markets made up for Monday’s selloff, caused by a perception that stocks were priced too high relative to companies’ earnings, to end the week little changed. The Federal Reserve also indicated this week it would start tapering its bond buying this year, likely softening its support of the nation’s mortgage lending market.
The Real Estate Select Sector Index, which matches the stock price performance of publicly traded 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 was 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.