Stock Groups

Cost of borrowing Evergrande stock hits new high on debt fears By Reuters

© Reuters. The headquarters of China Evergrande Group is located in Shenzhen (Guangdong province), China, September 26th, 2021. REUTERS/Aly Song

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

The short sellers take out shares and then sell them to try to get them back at a better price. According to FIS Astec data, September 23rd shows that they are currently paying annualised rates 92%.

This is an increase of 50% from two weeks ago.

According to data, only 2.2% are on loans for Evergrande. China’s developer is in debt of $305 billion and is currently short of cash. The share price has fallen 83% since this time last year.

According to market participants, the rise in borrowing costs is a result of both growing enthusiasm to take short positions and the scramble for stock to lend as the lenders recall shares in order to liquidate positions.

FIS Astec reports that borrowing costs have increased for other developers, although not in the same way.

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.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. CFDs include futures, stocks, indexes and Forex. Prices are provided not by the exchanges. They are provided by market makers. Therefore, prices can be inaccurate and differ from actual market prices. These prices should not be used for trading. Fusion Media is not responsible for trading losses that may be incurred as a consequence of the use of this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Trading the financial markets is one of most risky investment options. Please make sure you are fully aware about the costs and risks involved.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.