Trouble is brewing again in China’s property sector: Global attention is returning to China’s huge property market as mounting problems at the country’s largest developer fuel concern of contagion in the crisis-hit sector. Country Garden’s share price plunged more than 18% yesterday after the company suspended trading in a number of its bonds as it tries to raise funds to avert default. The situation at the highly-indebted company took a turn for the worst last week when it failed to meet interest repayments and announced a USD 7.6 bn first-half loss.

Remember: China’s property market has been in a slow-motion crisis for two years, which peaked in late 2021 when Evergrande — then the country’s second-largest developer — defaulted on its debt. With Country Garden now wobbling, analysts are warning about spillover effects into other areas of the Chinese economy and the financial system. Exhibit A: Zhongzhi, a USD 138 bn wealth manager, has reportedly missed payments, sparking concern in Beijing about its exposure to real estate.

Why this matters: A full-blown financial crisis in the world’s second-largest economy is not good news for the global economy.

ALSO WORTH NOTING-

  • PIF sees bounce in its Wall Street portfolio: The value of the Public Investment Fund’s investments in US equities jumped almost 10% to USD 38.9 bn in 2Q. (Asharq Business)
  • Turkey heading for a credit upgrade? Moody’s could upgrade Turkey’s credit rating for the first time in a decade if the government delivers on its pivot to more orthodox economic policies. (Bloomberg)
  • SBF hit with new indictment: Federal prosecutors have filed fresh charges against Sam Bankman-Fried, alleging the founder of the collapsed crypto exchange FTX used stolen client funds to make political donations ahead of the 2022 midterm elections. (Reuters)
  • Mastercard eyes a piece of MTN’s fintech unit: Mastercard will acquire up to 30% of the fintech arm of South African telecom giant MTN in a transaction that values the company at USD 5.2 bn. MTN’s share price rose 4.9% on Monday. (Bloomberg)

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THE CLOSING BELL-

The EGX30 rose 0.2% at yesterday’s close on turnover of EGP 3.2 bn (62.5% above the 90-day average). Regional investors were net buyers. The index is up 22.6% YTD.

In the green: Egypt Kuwait Holding (+1.4%), Qalaa Holdings (+1.3%), and CIB (+1.3%).

In the red: GB Corp (-2.2%), Beltone Financial Holding (-2.1%), and Madinet Masr (-1.7%).

The picture in Asia this morning: Shares in China and other parts of the region are rebounding after the country’s central bank unexpectedly cut interest rates in response to an economic slowdown and gathering crisis in its real estate sector. European and US markets are expected to rise at the opening bells.

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