Cost of borrowing Evergrande stock hits new high on debt fears

1 minute read

A traffic light is seen near the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

Register now for FREE unlimited access to Reuters.com

SINGAPORE, Sept 27 (Reuters) - The cost of borrowing China Evergrande (3333.HK) shares rocketed last week, data from research firm FIS Astec shows.

Short sellers borrow shares, sell them and hope to buy them back for a lower price. They are paying fees equivalent to annualised rates of 92%, FIS Astec figures as of Sept. 23 show.

That is up from 50% two weeks earlier.

Register now for FREE unlimited access to Reuters.com

Only about 2.2% of Evergrande's outstanding shares are on loan, the data shows. The Chinese developer owes $305 billion, is short on cash and its share price is down 83% this year.

Market participants have said the surge in borrowing costs reflects both rising enthusiasm for short positions in the company and a scramble to find stock to borrow as lenders have recalled shares to dump positions. read more

Borrowing costs for some other developers have climbed, but not to the same extent, according to FIS Astec.

Annualised rates for Guangzhou R&F Properties' shares (2777.HK), for example, rose from less than 1% at the start of the month to 6.6% on Sept. 23.

Costs to borrow have leapt in recent months
Register now for FREE unlimited access to Reuters.com
Reporting by Tom Westbrook; Editing by Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.