Cost of borrowing Evergrande stock hits new high on debt fears
A site visitors gentle is seen close to the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Track
SINGAPORE, Sept 27 (Reuters) – The price of borrowing China Evergrande shares rocketed final week, knowledge from analysis agency FIS Astec exhibits.
Brief sellers borrow shares, promote them and hope to purchase them again for a lower cost. They’re paying charges equal to annualised charges of 92%, FIS Astec figures as of Sept. 23 present.
That’s up from 50% two weeks earlier.
Solely about 2.2% of Evergrande’s excellent shares are on mortgage, the info exhibits. The Chinese language developer owes $305 billion, is brief on money and its share worth is down 83% this yr.
Market members have stated the surge in borrowing prices displays each rising enthusiasm for brief positions within the firm and a scramble to seek out inventory to borrow as lenders have recalled shares to dump positions.
Borrowing prices for another builders have climbed, however to not the identical extent, in accordance with FIS Astec.
Annualised charges for Guangzhou R&F Properties’ shares , for instance, rose from lower than 1% at first of the month to six.6% on Sept. 23.
Reporting by Tom Westbrook; Enhancing by Alexander Smith
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