Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Cost of borrowing Evergrande stock hits new high on debt fears

Published 27/09/2021, 10:33
Updated 27/09/2021, 10:35
© Reuters. A traffic light is seen near the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

© Reuters. A traffic light is seen near the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

SINGAPORE (Reuters) - The cost of borrowing China Evergrande shares rocketed last week, data from research firm FIS Astec shows.

Short sellers borrow shares, sell them and hope to buy them back for a lower price. They are paying fees equivalent to annualised rates of 92%, FIS Astec figures as of Sept. 23 show.

That is up from 50% two weeks earlier.

Only about 2.2% of Evergrande's outstanding shares are on loan, the data shows. The Chinese developer owes $305 billion, is short on cash and its share price is down 83% this year.

Market participants have said the surge in borrowing costs reflects both rising enthusiasm for short positions in the company and a scramble to find stock to borrow as lenders have recalled shares to dump positions.

© Reuters. A traffic light is seen near the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

Borrowing costs for some other developers have climbed, but not to the same extent, according to FIS Astec.

Annualised rates for Guangzhou R&F Properties' shares, for example, rose from less than 1% at the start of the month to 6.6% on Sept. 23.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.