(Alliance News) - Stocks in London are set to open lower on Monday as markets eyed further troubling developments for the Chinese property sector.
IG says futures indicate the FTSE 100 to open 15.11 points lower, or 0.2%, at 7,668.80 on Monday. The index of London large-caps closed up 5.29 points, 0.1%, at 7,683.91 on Friday.
Shares in embattled Chinese property developer Evergrande plummeted Monday following the announcement that it would be unable to carry out a restructuring plan intended to guarantee its survival.
The company's shares collapsed more than 25% in Hong Kong by the break, trading at around HKD0.42 per share, underscoring market concerns as China's property sector faces an unprecedented crisis.
On Sunday evening, Evergrande announced that it was unable to issue new debt as its subsidiary, Hengda Real Estate Group, "is being investigated".
That came two days after the company said meetings on the restructuring scheduled for Monday and Tuesday would not take place, saying it was "necessary to reassess the terms" of the plan in order to suit the "objective situation and the demand of the creditors".
Evergrande's enormous debt has contributed to the country's deepening property market crisis, raising fears of a global spillover.
The property sector, which along with construction accounts for about a quarter of China's gross domestic product, is a key pillar of the country's growth and has experienced a dazzling boom in recent decades.
But the massive debt accrued by the industry's biggest players – Evergrande had estimated debt of USD328 billion at the end of June – has been seen by Beijing in recent years as an unacceptable risk for China's financial system and overall economic health.
In China on Monday, the Shanghai Composite was down 0.4%, while the Hang Seng index in Hong Kong was down 1.2%.
Further, European businesses in China are increasingly questioning their positions in the face of tough new security laws and a politicisation of trade, an EU commissioner warned in Beijing.
"European companies are concerned with China's direction of travel," Valdis Dombrovskis said in a speech at the capital's Tsinghua University on Monday.
"Many are questioning their position in this country."
He pointed to a new foreign relations law and a recent update to China's anti-espionage laws as being of "great concern to our business community".
Sterling was quoted at USD1.2241 early Monday, down from USD1.2267 at the London equities close on Friday. The euro traded at USD1.0649, lower than USD1.0664. Against the yen, the dollar was quoted at JPY148.36, higher versus JPY148.22.
In Tokyo on Monday, the Nikkei 225 index was up 0.9%. The S&P/ASX 200 in Sydney closed down 0.1%.
In the US on Friday, Wall Street ended lower with the Dow Jones Industrial Average down 0.3%, the S&P 500 down 0.2% and the Nasdaq Composite down 0.1%.
Gold was quoted at USD1,922.96 an ounce early Thursday, lower than USD1,927.93 on Friday. Brent oil was trading at USD92.26 a barrel, down from USD92.32 late Friday.
In Monday's corporate calendar, there are half-year results from Devolver Digital, Venture Life and Dialight.
The economic calendar has the German Ifo business climate index at 0900 BST.
By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.