Country Garden share price collapse to gain steam

Country Garden (HKX: 2007) share price has crawled back in the past few days even as the company’s challenges continue. The stock rose to a high of $0.96 in Hong Kong, after sliding to a record low of $0.68 earlier this month.

Country Garden woes continue

Country Garden, the embattled Chinese developer, delivered more bad news to investors on Wednesday. In a filing, the company requested its bondholders a 40-day grace period to pay its renminbi bonds that will mature next week.

The request raised concerns that the company’s financial state is worse than what analysts are expecting. For one, the firm has already missed two dollar bond payments worth about $525 million.

Companies don’t default immediately after missing a debt payment. Instead, they are given a 30-day grace period before they can be classified as defaulters. Therefore, with days running out, there is a likelihood that Country Garden will default on its obligations.

The next important catalyst for the Country Garden share price will be the company’s earnings scheduled for Thursday. These results are expected to provide more colour about the company’s challenges.

Watch here: https://www.youtube.com/embed/3RphwkR0hZg?feature=oembed

In a recent statement, the company warned that its total loss for the first half of the year will be a whopping $7.5 billion. Its revenue is also expected to tumble during the period.

Country Garden’s challenges mirror those of Evergrande, the giant developer that collapsed in 2021. Its stock dropped by almost 90% when they resumed trading this week as investors predicted eventual bankruptcy.

Country Garden’s challenge is how to raise cash to pay back its debt and complete its ongoing problems. Many existing customers have started pausing their payments. At the same time, the company is struggling to attract new customers.

Therefore, I believe that the Country Garden share price will remain under pressure for a while. And efforts by Beijing to save the housing sector will likely face significant challenges as the economic slowdown intensifies.

Country Garden share price forecast

The daily chart shows that the Country Garden stock price has been in a strong bearish trend in the past few months. This decline saw the shares drop below the important support level at $0.98, the lowest level in November. Recently, the stock has retested this level. A break and retest is a sign of a bearish continuation.

Country Garden share price remains below all moving averages. Therefore, there is a likelihood that the stock will continue falling as sellers target the key support level at $0.50.

The post Country Garden share price collapse to gain steam appeared first on Invezz.