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Property Stocks Sink After Demolition Order: Evergrande Update

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(Bloomberg) — Chinese developer shares dropped following local media reports that China Evergrande Group has been ordered to tear down apartment blocks in a development in Hainan province. Evergrande halted trading in its shares and said the order affected more than three dozen buildings but had no impact on the rest of the development.

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An index of Chinese developer shares slumped as much as 2.8% in Hong Kong on Monday before closing 1.7% lower. Evergrande will handle the case in accordance with the demolition order from the local government in Hainan, a unit of the company said in a statement. Evergrande’s comments came after Cailian reported that the local government told Evergrande to demolish 39 buildings in 10 days because the building permit was illegally obtained.

The Hainan news underscored investor concern that policy makers are unlikely to dramatically ease their crackdown on indebted property companies like Evergrande even as they take steps to ensure stronger developers retain access to funding. “Even though the Hainan project isn’t a significant one in its country-wide strategy, it will have a big impact on confidence,” said Kenny Ng, strategist at Everbright Sun Hung Kai Co.

Property firms have mounting bills to pay in January and shrinking options to raise necessary funds. The industry will need to find at least $197 billion to cover maturing bonds, coupons, trust products and deferred wages to millions of migrant workers, according to Bloomberg calculations and analyst estimates. Contracted sales for 31 listed developers fell 26% in December from a year earlier, according to Citigroup Inc. analysts. Evergrande’s sales dropped 99% and were 7% lower than November, the analysts wrote in a note dated Sunday. Sales for Shimao slid 25% from November.

The slump in developer shares wasn’t matched by their bonds. Chinese high-yield dollar bonds rose as much as 1 cent on the dollar on Monday, according to credit traders.

Key Developments:

  • China’s Home-Market Slump May Prompt Developers to Raise Equity

  • China Developer Shares Slump as Evergrande Halt Sparks Concerns

  • Evergrande December Sales Fell 99% Year-on-Year, Citi Says

  • Logan Says It Paid Off a Dollar Bond Maturing Monday

  • Swire Properties Crosses Above Bollinger Band

  • Builders Shimao, Sunac Lead Gains for China High-Yield USD Bonds

  • Evergrande Suspends Trading in Hong Kong

  • Evergrande Told to Dismantle Illegal Buildings in Hainan: Report

  • China Developers’ 2022 Home-Sales Recovery Could Be Challenging

  • Developer Cifi Offers to Purchase Outstanding 5.5% 2022 Bond

  • Shimao’s Liquidity Woes May Persist on Home Sales Slump: React

Sunac Services Ends First Service Stake Purchase (5:57 p.m. HK)

Sunac Services’ agreement to buy a stake in First Service has been terminated as no formal deal has been entered into on or before Dec. 31, Sunac Services said in Hong Kong stock exchange filing.

Evergrande December Sales Fell 99% (12:04 p.m. HK)

Evergrande records a 99% decline in sales year on year, the steepest among 31 listed developers tracked by Citigroup analysts, and a 7% drop versus November.

December sales overall were not as bad as feared, Citi analysts including Griffin Chan write in Sunday note, with weighted average for 31 developers down 26% from a year earlier, and up 23% from November.

Evergrande Told to Dismantle Illegal Buildings in Hainan: Report (9:48 a.m. HK)

The government of Danzhou, a prefecture-level city in the southern Chinese province of Hainan, has asked Evergrande to tear down 39 illegal buildings in ten days, Cailian reported on Sunday, citing a document from the local government.

The report cited the document, which was dated Dec. 30, as saying that the Danzhou government said an illegally obtained permit for the buildings had been revoked so the buildings need to be dismantled.

Evergrande didn’t immediately respond to a request seeking comment and calls to Danzhou authorities went unanswered on a public holiday in China on Monday.

Shimao Shares Drop to Lowest Since 2009 Amid Persistent Liquidity Risks (9:50 a.m. HK)

Shares in Shimao Group Holdings dropped 5.9% to the lowest since March 2009 after the property company missed its targets.

“Risks to Shimao’s liquidity could extend into 2022 as a parade of unfavorable media headlines threatens to keep potential buyers at a distance,” Bloomberg Intelligence analyst Kristy Hung wrote in a note on Monday.

The company missed its lowered, 290 billion-yuan sales guidance for 2021 by 7%, with December’s sales tumbling 68% year-over-year and by 25% sequentially, to 12 billion yuan, according to China Real Estate Information Corp.’s preliminary data.

Evergrande Suspends Trading in Hong Kong (8:58 a.m. HK)

The company gave no reason for the trading suspension.

China Evergrande on Friday dialed back payment plans on billions of dollars of overdue wealth management products as its liquidity crisis showed little sign of easing.

Developer Cifi Offers to Purchase Outstanding 5.5% 2022 Bond (7:52 a.m. HK)

Cifi Holdings offered to buy the outstanding notes at $1,000.5 for each $1,000 in principal amount plus accrued and unpaid interest, it said in a statement to the Hong Kong stock exchange.

The Chinese developer will determine the aggregate principal amount of notes that it will accept for purchase. The offer to buy the $505.1 million of notes that remain outstanding will expire at 4pm London time on Jan. 7.

Developers Face $197 Billion Challenge (Jan. 2)

China’s property developers have mounting bills to pay in January and shrinking options to raise necessary funds.

The industry will need to find at least $197 billion to cover maturing bonds, coupons, trust products and deferred wages to millions of migrant workers, according to Bloomberg calculations and analyst estimates. Beijing has urgedbuilders like China Evergrande Group to meet payrolls by month-end in order to avoid the risk of social unrest.

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?

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After pandemic drop, Canada’s detention of immigrants rises again By Reuters

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© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.

FEW NO-SHOWS AS DETENTIONS DROPPED

Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar

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Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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