The stock of one of China’s largest real estate firms crashed to its lowest price ever Monday, highlighting mounting concerns about the health of the world’s second-largest economy.
Chinese real estate giant Country Garden Holdings has fallen on hard times.
Shares of property developer Country Garden’s stock cratered about 20% in Monday trading after the company announced the suspension of trading some of its bonds domestically amid angst about the company’s potential to default; the stock is down roughly 70% this year.
The Hang Seng index tracking stock performance in Hong Kong, where Country Garden is listed, slid 1.6% Monday, while several of the most valuable New York-listed Chinese stocks were also in the red, including the largest such firm Alibaba, which was down 3%.
The Country Garden news reinforced the notion that “recession risks in China are real,” explained Sevens Reports’ Tom Essaye, alluding to concerns about deflation, diminished consumer spending and a general sense of economic malaise in China, which trails only the U.S. in gross domestic product and is a crucial market for many American companies.
In another potentially troubling milestone Monday, the Chinese yuan hit its lowest level against the dollar since late 2022, as foreign exchange investors lose faith in the Chinese currency as the country’s economic outlook looks bleaker than other powerhouses.
U.S. stocks were largely flat Monday, with the Dow Jones Industrial Average down about 0.1% by 11:15 a.m. ET.
“We stay unexcited by China exposure,” JPMorgan’s top global equity strategist Mislav Matejka wrote in a weekend note to clients. The economic powerhouse’s “ailing” real estate sector is in a “structural downtrend,” the bank continued.
One of the 1,000 most valuable companies in the world, Country Garden’s valuation crashed as profits tanked 75% from 2019 to 2022 as China’s real estate market flailed during the pandemic. Country Garden chairman and largest shareholder Yang Huiyan’s net worth shrank nearly $500 million Monday to $4.2 billion, according to Forbes’ estimates. Yang, who was Asia’s wealthiest woman and the world’s seventh-richest woman in 2021 with a $29.6 billion fortune, is now just the ninth-richest woman in China after her net worth’s 86% tumble.
The yuan wasn’t the only major currency to hit a milestone low against the dollar Monday, as the ruble slid to its least expensive level since last spring. The Russian currency is down nearly 40% over the last year, now worth about 101 against the dollar, compared to about 80 just before Russia invaded Ukraine.