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Nikkei Catches Up, Evergrande Falls in Hong Kong

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The Tokyo stock market closed sharply higher on Friday. Japanese investors returned after a day off and caught up after Thursday’s brisk recovery in global markets.

 

Hopes that the global economic recovery will not be derailed by the debt problems of the Chinese real estate developer China Evergrande Group and the imminent phasing out of corona support by the US Federal Reserve has fueled optimism on the Japanese stock market.

Evergrande, on the other hand, fell nearly 10 percent in Hong Kong. The stock gained almost 18 percent a day earlier on reports that the ailing company would pay the interest on the part of its loans on time. However, Evergrande bondholders who should receive an interest payment on Thursday have still not received any further information about that payment.

The company must pay within 30 days, or it will default. Business newspaper The Wall Street Journal also reported that Chinese authorities have called on local administrators to prepare for the possible demise of Evergrande.

Evergrande’s shaky financial position also appears to extend beyond the group’s real estate business. China Evergrande New Energy Vehicle Group plunged nearly 18 percent. According to Bloomberg news agency, Evergrande’s electric car division is lagging behind in paying salaries. The bills of several factory equipment suppliers also remain unpaid.

The Chinese stock markets kept the losses limited. For the third day in a row, the Chinese central bank has pumped billions more into the financial system so that the banks have enough money to absorb a possible shock from the collapse of Evergrande. As a result, the Hang Seng index in Hong Kong was slightly lower, and the main index in Shanghai fell 0.4 percent.

The Nikkei in Tokyo entered the weekend at 30,248.81 with a gain of 2.1 percent, erasing much of the previous week’s losses. Japanese container carriers Kawasaki Kisen and Nippon Yusen rose to 10 percent in hopes of a continued strong recovery in the economy.

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