The floorboards are giving way underneath the Chinese property companies. On Monday, share prices throughout the sector fell by the most this year. Evergrande dropped 21 per cent after it scrapped key creditor meetings at the last minute.
There is still risk of contagion both within China and beyond. That nervousness could spread into commodities. Iron ore prices fell more than 4 per cent on Monday. This comes when seasonal demand from China has historically been strong. China buys about 70 per cent of the world’s seaborne iron ore. Chinese developers have stopped restocking steel.
Price volatility tells the story. Already the market fears a default by Country Garden. A dollar bond of Country Garden, previously one of the safest large developers, fell below 10 cents on the dollar. China Aoyuan Group’s stock price fell 73 per cent. A court-ordered liquidation of China Oceanwide looms after a Bermuda court issued a winding-up order.