Hong Kong’s benchmark Hang Seng index closes in bear market territory. As uncertainty over China’s property market and growth prospects wiped out early-year gains, Hong Kong’s benchmark stock index closed in bear market territory, falling 2.1% on Friday and closing more than 20% below its January highs.
The additional losses on Friday followed the announcement that the troubled Chinese real estate giant Evergrande had filed for bankruptcy in a U.S. court.
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The company sought protection under Chapter 15 of the United States bankruptcy code, which shields non-U.S. companies undergoing reorganization from creditors.
As a result of the Hang Seng index’s decline on Friday, many of the region’s largest companies ended the day in the red, including Tencent (-2.34%), Alibaba (-3.44%), and HSBC (-1.1%).
A bear market is a sustained decline in prices in which a broad market index falls at least 20% from its most recent peak. Friday’s closing price for the Hang Seng index was 17,950.85, a decrease of 20.88% from the closing price of 22,689.9 on January 27.
AJ Bell’s Russ Mould expressed concern over the recent filing by Country Garden, and when combined with their decision to suspend payments on some bonds, it raises worries of a potential domino effect.
JPMorgan predicts more high-yield defaults in emerging markets due to concerns over China’s property sector.
Country Garden has a wider range of property developments than Evergrande, who defaulted in 2021 and announced an offshore debt restructuring program in March.
