Unhappy moon festival for the rich

Ben Kwok September 21, 2021 10:39

For over 3,000 years, Mid-Autumn Festival has been the second-most important holiday after Lunar Chinese New Year. It dates back to when ancient Chinese worshipped the moon for bountiful harvests.

Not this year though for many Hong Kong and Chinese developers as they are unlikely to be enjoying this holiday. Especially China Evergrande chairman Hui Ka Yan who is facing angry investors demanding their money back. The highly leveraged developer is estimated to owe US$300 billion to banks, suppliers, retail investors and other creditors.

Evergrande is not looking good. Share price of Evergrande lost 80 per cent in the last three months under the weight of its debt mountain. The default worry hit the global markets on Monday, reminiscent of the collapse of Lehman Brothers 13 years ago – also around the Moon Festival.

It is believed that Evergrande, which sold some 500 billion yuan of properties last year, would not get a bailout from the government. In the worst case, a China Lehman moment and subsequent stock market crash could be on the cards.

Hong Kong property tycoons are also in a tough situation as they were told to be more patriotic and help solve a potentially destablising housing shortage problem in Hong Kong.

That was according to Reuters, which reported last Friday that the rules of the once – and always – monopoly game have changed as Beijing no longer tolerated “monopoly behavior”.

The worry of the end of the golden era sent four major developers namely Sun Hung Kai Properties, Henderson Land, CK Asset and New World Developement stocks down around 10 per cent.

Housing shortage has been the root of discontent in Hong Kong, where youngsters are frustrated with their inability to afford their own homes. In this international city famous for the most concentrated wealth on earth, many citizens are living in small units, often referred to as nano flats, or worse, in subdivided flats.

Following Beijing’s call for the city to get rid of the notorious subdivided flats and cage homes by 2049, Financial Secretary Paul Chan recently promised that solutions will be worked out.

That along with the China’s pledge for co-prosperity, it could be more challenging for Hong Kong property deveopers to make money.

Same thing can be said too in Macau, where a change in the rule of game is looming.

The world’s largest casino could see tougher supervision in the wake of a rebidding for the lucrative casino licenses next year. Shares of major players such as Sands China, Galaxy Entertainment, Wynn Macao and SJM have all been under great pressure recently.

So the more money you have, the more you suffer? Well, they can get some redemptions from reading Su Shi’s poem “Prelude to Water Melody”.

“Men have sorrow and joy; they part or meet again; The moon is bright or dim and she may wax or wane. There has been nothing perfect since the olden days. So let us wish that man will live long as he can!”

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Ben Kwok

EJ Insight writer