Yang Huiyan, the majority shareholder of Country Garden, one of China’s largest real estate groups, has seen his wealth halve in just one year. A reversal of fortune illustrates the difficulties of a Chinese market now closely watched by the Beijing authorities. Explanations.
She is still the richest woman in Asia but with a fortune cut in half. In just one year, Yang Huiyan’s wealth has grown from $23.7 billion to $11.3 billion, according to Bloomberg’s Billionaire Ranking released this week. A vertiginous fall which once again illustrates the fragility of the Chinese real estate market.
A discreet heiress, Yang Huiyan is the majority shareholder of Country Garden, a company created by her father in the early 1990s, which has become one of the most important promoters in China.
The company achieved the largest turnover in the sector last year despite a real estate crisis symbolized by the Evergrande group, the former number 1, weighed down by an abyssal slate of 300 billion dollars.
Far from being so badly off, Country Garden is however very indebted, like most Chinese real estate giants. However, since 2020, Beijing has whistled the end of recess: the conditions of access to bank credit for promoters have become much more restrictive. Objective: to avoid a collapse of the sector, potentially cataclysmic for the entire Chinese economy.
Victim of market jitters
To honour its payment deadlines and launch new investments, Country Garden has therefore chosen to put on sale, Wednesday, July 27, new shares to increase its liquidity.
“However, this sale of shares was interpreted as a sign of vulnerability in a sector in great difficulty which represents a significant weight in Chinese GDP. The financial markets are therefore very nervous”, analyzes the economist Mary-Françoise Renard, author of “China in the global economy” (ed. Blaise Pascal University Press).
As a result, Country Garden shares lost 15% of their value on the Hong Kong Stock Exchange, effectively dealing a serious blow to Yang Huiyan’s portfolio.
“The tightening of credit access conditions was necessary, but in the short and medium term it increases the difficulties of these companies, which are finding it increasingly difficult to finance themselves,” explains Mary-Françoise Renard. “A few years ago, Country Garden could have borrowed from banks without any problem.”
Cascading payment defaults
If Country Garden was able to raise funds at the cost of a fall in the value of its share, other major players are far from having such solid backs and find themselves, like Evergrande, in the inability to repay a maturing loan.
At the beginning of July, the Shimao group, which recorded a 72% drop in sales over one year in the first five months of the year, had to give up repayment of a loan worth more than one billion dollars. dollars. In May, the Sunac group found itself short of cash and announced a payment default.