This “could leave it the most exposed to the downturn in the markets,” said Kristy Hung, a senior analyst at Bloomberg Intelligence.

Meanwhile, the builder’s contracted sales slumped almost 40 per cent to 185.1 billion yuan for the first six months of the year. Bloomberg Intelligence estimates the developer would need to spend up to 337 billion yuan — more than peers — to deliver the properties it pre-sold but didn’t book yet.

Last month, Moody’s Investors Service downgraded Country Garden’s credit rating to junk and changed its outlook to negative, citing a deteriorating financial position and weakened access to long-term funding.

In response to questions, Country Garden said it doesn’t have any projects being abandoned unfinished, and that there’s either a shortage of homes or supply is at a reasonable level in the tier 3 and 4 cities it entered.

Co-founded in the southern city of Foshan by Yeung Kwok Keung, Country Garden has grown rapidly over the past three decades as the nation’s housing market boomed. Its catchy slogan, “get yourself a five-star home,” helped it make a name for itself in the Guangdong province bordering Hong Kong and fuelled a cross-country expansion. By the end of last year, it had more than 3,000 projects in 299 Chinese cities and a few in Malaysia.

“The mainland property crisis has sent a domino effect to the capital chain of the entire sector. Uncertainties will still linger.”

Kenny Ng, a strategist at Everbright Securities International

Yeung transferred his stake to Yang, his second daughter, in 2005 after she joined the company as his personal assistant to learn the ropes and eventually succeed him. By age 25, the Ohio State University alum was China’s richest woman. She became Country Garden’s vice chairman in 2012 and its co-chair in 2018.

Yang, now in her early forties, owns about 60 per cent of Country Garden and a 43 per cent stake in its management-services unit. Her husband, sister and cousin all sit on the company’s board and, like Yeung, have kept a low profile, avoiding media interviews.

To help defuse what may be the largest mortgage revolt in China’s history, its banking regulator has vowed to ensure property developers could complete construction of pre-sold houses, and a report said the State Council has approved a plan to set up a fund supporting some developers and real estate firms.

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Yet officials have to send clear guidelines to banks on how to handle the crisis. That could prompt them to reshape their exposure to the industry and take a more cautious approach to avoid bad debt, which would make it more challenging for private builders to raise funds.

“The mainland property crisis has sent a domino effect to the capital chain of the entire sector,” said Everbright’s Ng. “Uncertainties will still linger.”

Bloomberg

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