After Evergrande Group China's Shimao poses risk of wreckage.
Shimao Group holdings limited the 14th biggest developer in China is facing the same crisis as was Evergrande group did a year before. The company is in shortage of finance and it has put a chunk of its assets for sale in expectation to raise finance. This year a 2.2 billion dollars bonds of the company is in due and the investors and market researchers are closely watching it whether the company is going to delay or default the repayment.
The desperate need of finance and the degradation of company's rating compelled the company to put on sale it's assets. Chinese developers all are under a stringent regulation web over a year and the housing market are on the dull. A policy to regulate the ultra rich and to bring parity to all the citizens brings a deep fear in the minds of developers and it is making the overseas investors to think again for an investment in China.
Evergrande group faced a similar slap last year when it defaulted the repayment of its bonds and the Chinese government let the company suffer. Developers in China has borrowings more than what it could bear, with hopes that the communist government will hold them in its palm when they suffer any difficulties, to protect national economy. However, this time the government made it's policy stringent and wanted to teach a lesson that the company will no longer be protected in economic interest and they would have to pay for what it owes.
When another company follows the same path as the Evergrade did the overall economy of China and it's growth gets affected. As the Chinese developers are facing difficulties in financing due to the changed policies a recovery in this sector can only be expected if the state make appropriate changes in its policy and the overseas investment in future will depend directly on that.