Sunac China is Facing a Selloff on High Debt Ratio
On last Friday, Sunac China (1918), a leading property developer in China, slumped more than 5% as rumors said China Evergrande (3333) may face a potential default ......
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On last Friday, Sunac China (1918), a leading property developer in China, slumped more than 5% as rumors said China Evergrande (3333) may face a potential default as it may need to repay investors 19 billion dollars by January, unless regulators approve its listing on the Shenzhen stock exchange, according to Bloomberg.
In fact, Sunac China's total debt to equity reached 388.68% in the 2019 fiscal year, while China Evergrande was 549%. Both of them have very high debt ratios. Investors are worried that the default of bond could cause the break of the company's cash flow.
From a technical point of view, the stock broke below the rising trend line drawn from March low, indicating the bearish reversal signal. In addition, the prices are capped by a declining trend line drawn from July's high.
Currently, the stock posted a rebound after failing to penetrate the low of March at HK$25.00, but it is still trading below both declining 20-day and 50-day moving averages.
The bearish readers could set the resistance level at HK$32.00, while support levels would be located at HK$28.65 and HK$25.00.
Source: GAIN Capital, TradingView
In fact, Sunac China's total debt to equity reached 388.68% in the 2019 fiscal year, while China Evergrande was 549%. Both of them have very high debt ratios. Investors are worried that the default of bond could cause the break of the company's cash flow.
From a technical point of view, the stock broke below the rising trend line drawn from March low, indicating the bearish reversal signal. In addition, the prices are capped by a declining trend line drawn from July's high.
Currently, the stock posted a rebound after failing to penetrate the low of March at HK$25.00, but it is still trading below both declining 20-day and 50-day moving averages.
The bearish readers could set the resistance level at HK$32.00, while support levels would be located at HK$28.65 and HK$25.00.
Source: GAIN Capital, TradingView
On last Friday, Sunac China (1918), a leading property developer in China, slumped more than 5% as rumors said China Evergrande (3333) may face a potential default as it may need to repay investors 19 billion dollars by January, unless regulators approve its listing on the Shenzhen stock exchange, according to Bloomberg.
In fact, Sunac China's total debt to equity reached 388.68% in the 2019 fiscal year, while China Evergrande was 549%. Both of them have very high debt ratios. Investors are worried that the default of bond could cause the break of the company's cash flow.
From a technical point of view, the stock broke below the rising trend line drawn from March low, indicating the bearish reversal signal. In addition, the prices are capped by a declining trend line drawn from July's high.
Currently, the stock posted a rebound after failing to penetrate the low of March at HK$25.00, but it is still trading below both declining 20-day and 50-day moving averages.
The bearish readers could set the resistance level at HK$32.00, while support levels would be located at HK$28.65 and HK$25.00.
Source: GAIN Capital, TradingView
In fact, Sunac China's total debt to equity reached 388.68% in the 2019 fiscal year, while China Evergrande was 549%. Both of them have very high debt ratios. Investors are worried that the default of bond could cause the break of the company's cash flow.
From a technical point of view, the stock broke below the rising trend line drawn from March low, indicating the bearish reversal signal. In addition, the prices are capped by a declining trend line drawn from July's high.
Currently, the stock posted a rebound after failing to penetrate the low of March at HK$25.00, but it is still trading below both declining 20-day and 50-day moving averages.
The bearish readers could set the resistance level at HK$32.00, while support levels would be located at HK$28.65 and HK$25.00.
Source: GAIN Capital, TradingView
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