HK investors take fright as debt rumours hit market

Fears that a big property group might default on its debts triggered a 647-point fall in Hong Kong share prices yesterday, reports Stephen Vines. Meanwhile, the International Monetary Fund appears to have forced the Indonesian government into finally accepting the terms of its $43bn rescue package.

Rumour proved to be the most powerful force in the Hong Kong stock market yesterday as investors took fright from reports that the Sino Group, a major property developer controlled by the Ng family, would be forced to default on short term debts. The Hang Seng fell 7 per cent.

The rumours sent the shares of Sino Hotels down 51 per cent, with Sino Land plunging 45 per cent and its associated company, TST Properties, falling 34 per cent. Fears of default also helped fuel significant declines in the shares of HSBC Holdings, one of the two large Hong Kong banks who are lenders to the Sino Group.

"The directors wish to state categorically that there is absolutely no ground to such rumours ... the Sino Group is able to pay its loans as they become due and has sufficient working capital," the company said.

Those with long memories in the Hong Kong market recalled that the Ng family almost caused the collapse of the entire Hong Kong stock market in the wake of the 1987 crash when they were left holding massive uncovered futures positions which they were prepared to default on but were persuaded to settle in part following a government bail-out.

Ten years on, the Sino Group has bounced back and has gained a reputation as one of the most aggressive major-league property developers. It also has a reputation for high gearing. However, few analysts believe that the company would go so far as to default on its loans. Nikko Securities, in a commentary, described the situation at Sino as "tight" but believed that the company would deal with it by lowering prices for pre-sales of new projects.

Meanwhile in Indonesia, which has been casting a spell of gloom over the following last week's Alice in Wonderland budget, the government has been forced to concede to the conditions laid down by the IMF.

An agreement, signed yesterday by President Suharto and IMF managing director, Michel Camdessus, provides for: restructuring in the financial sector; and an end to special privileges for a number of monopolies and projects controlled by members of the Suharto clan. It will abolish a clutch of subsidies which have helped keep the poor off the breadline. However, vital controls on rice and fuel prices escaped the net because of real fears that this could provoke social unrest.

The initial response of investors was less than encouraging. The local currency lost another 12 per cent of its value and share prices dropped 4 per cent.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea