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Market Daily Report: Bursa Malaysia Gives Up Earlier Gains To End Mixed

KUALA LUMPUR, Nov 19 (Bernama) -- Bursa Malaysia gave up earlier gains to end mixed today, amid a higher regional market showing, as property, construction, and healthcare counters attracted buying interests, while plantation, banking, and telecommunication stocks saw some profit-taking, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.70 points to close at 1,602.34 from yesterday’s close of 1,604.04. The benchmark index, which opened 0.86 of-a-point lower at 1,603.18, moved between 1,601.02 and 1,608.88 during the trading session. However, the broader market was mixed to higher, with gainers leading decliners by 565 to 438 while 502 counters remained unchanged, 961 untraded, and 14 suspended. Turnover narrowed to 2.83 billion units valued at RM2.08 billion versus 2.96 billion units valued at RM2.23 billion yesterday. Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the benchmark index remained range-bound and it required a dec
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Country Garden Proposes Offshore Debt Restructuring Plan to Creditors

Key Takeaway: Country Garden submits a preliminary debt restructuring proposal to creditors in a bid to avoid liquidation, as its cash flow outlook worsens amidst China's struggling property market.

Restructuring Proposal Details

  • Preliminary Terms Submitted:

    • The proposal includes revised cash flow projections, indicating weaker cash flow in the coming years compared to earlier estimates.
    • Aims to demonstrate the company’s ability to meet obligations.

  • Objective:

    • To gain creditor support ahead of the next Hong Kong court hearing on Jan. 20, 2025.

Background

  • Default:

    • Once China's largest developer, Country Garden defaulted on US$11 billion (RM49.2 billion) in offshore bonds late last year.
    • Facing a liquidation petition in Hong Kong.

  • Missed Deadline:

    • Initially planned to publish term sheets in September 2024 for creditor approval, but the deadline was missed.

China's Property Market Struggles

  • Economic Measures:

    • Government efforts to revive the property sector have included:
      • Tax incentives to lower home purchase costs.
      • Rate cuts (25 basis points in October).
    • Despite these, new home prices in October saw the largest YoY drop since 2015, and property investment declined 10.3% in the first 10 months of 2024.

  • Impact on Country Garden:

    • The weak market conditions have made it difficult for the company to stabilize its finances and meet obligations.

Next Steps

  • Court Hearing:

    • If creditors support the restructuring plan, Country Garden could seek an extension from the court to implement the proposal.

  • Adviser Involvement:

    • PJT Partners represents key offshore bondholders in the talks, but no comments have been made regarding the current proposal.

Outlook

The success of Country Garden’s restructuring plan hinges on creditor support and the court’s approval. However, with worsening cash flow and a sluggish property market, the path forward remains uncertain. The case underscores the broader challenges faced by China’s heavily indebted real estate sector.

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