The crisis in the Chinese real estate sector is also affecting the richest woman in Asia. The assets of the majority shareholder of China’s largest real estate developer have shrunk by more than 52 percent. If the trend continues, another billionaire could soon steal the title away from her.
China’s real estate sector has lurched from one crisis to the next and has not only weighed heavily on growth over the past year, but also deprived Asia’s richest woman, Yang Huiyan, of more than half of her fortune. This is shown by the “Bloomberg Billionaires Index”, as reported by the “Guardian”. The majority shareholder of China’s largest real estate developer, Country Garden, saw its net worth plummet by more than 52 percent to $11.3 billion compared to $23.7 billion a year ago.
Country Garden stock fell more than 13 percent on Wednesday. The property developer’s announcement of a discounted sale of shares to refinance debt hit the mood. Proceeds from the sale will be used for “refinancing existing foreign debt, general working capital and future development purposes,” Country Garden said in a statement to the Hong Kong Stock Exchange.
According to stockbrokers, the high discount raised concerns among investors about the refinancing needs of other Chinese property developers. This is causing nervousness in the sector, which is already plagued by liquidity stress. Investors are concerned that the real estate market could collapse. A spreading boycott of mortgage repayments for uncompleted housing caused concern, which could weigh on the developer and banking sectors.
“The Chinese real estate sector is in the midst of a depression and the recent mortgage boycott is a sign of the severity of the downturn,” said analysts at Societe Generale. “The scale of this boycott is not uncontrollable in its current form, but there is a risk of escalation.” The real estate sector accounts for an estimated 18 to 30 percent of the country’s GDP and is a key growth engine for the world’s second largest economy.
According to state media, Yang inherited her fortune when her father – Country Garden founder Yang Guoqiang – transferred his shares to her in 2005. Two years later, after the construction company went public in Hong Kong, she became the richest woman in Asia. The title could soon be snatched away from her by Hengli Petrochemical, chairman of man-made fibers company and vice-chairman of holding company Hengli Group, Fan Hongwei, with a net worth of $11.2 billion.
