Another Chinese developer falls into crisis. Facebook suffers a long, costly outage. China keeps up the military pressure on Taiwan. Here’s what you need to know today.
Facebook suffered a major outage that shut out many of its 2.7 billion global users, idled some of the company’s employees and prompted a public apology. Users around the world were unable to access Facebook’s family of social-media apps, including the main social network, Instagram and WhatsApp, in one of the longest failures in recent memory. Downdetector, which monitors internet problems, said the Facebook outage was the largest it had seen, with more than 10.6 million reports worldwide. Mark Zuckerberg’s personal wealth fell by more than $6 billion just in a few hours, while Facebook shares fell 4.9%.
Another Chinese developer fell into crisis on after failing to repay a maturing bond, adding to the strains of the nation’s heavily leveraged property firms following industry giant Evergrande’s debt woes. Fantasia Holdings didn’t repay a $205.7 million bond that was due Monday. The developer’s problems come a day after Evergrande shares were halted in Hong Kong pending an announcement on a “major transaction.” It was later reported that Hopson Development plans to acquire a 51% stake in Evergrande’s property-services unit, according to Chinese financial news platform Cailian. Has the Evergrande saga passed you by? Here’s why everyone’s talking about it.
The Chinese province that was the initial epicenter of the Covid-19 outbreak made significant purchases of equipment used to test for infectious diseases months before Beijing notified international authorities of the emergence of a new coronavirus, according to research by a cybersecurity company. Australian-U.S. firm Internet 2.0 concluded with “high confidence that the pandemic began much earlier than China informed the WHO about Covid-19.” Several medical experts said the report did not contain enough information to draw such conclusions, while China’s Foreign Ministry disputed the findings. Meanwhile, airline losses from Covid are set to pass $200 billion.
Asian stocks look set to fall after tech shares led a U.S. slide amid concern that surging prices for raw materials risk fanning inflation and sapping economic momentum. Equity futures fell in Japan, Australia and Hong Kong. The S&P 500 declined to the lowest since July and the Nasdaq 100 shed more than 2%, dragged down by megacap tech firms like Amazon.com and Facebook. The energy sector was among the few to climb in the U.S. session. Elsewhere, Bitcoin hovered around $49,000.
Chinese warplanes again made sorties in record numbers close to Taiwan on Monday, continuing their display of military might over the past four days and ignoring a U.S. call to end “provocative” pressure. PLA aircraft conducted 56 flights near Taiwan on Monday, with 52 fighter jets detected during daylight hours and another four at night, Taiwan’s Defense Ministry said. It follows dozens of incursions into Taiwan’s air defense identification zone at the weekend. In other news, the U.S. will focus on enforcing commitments made in its unfulfilled trade deal with China when it engages with Beijing in coming days. While at odds with China on economic, military and political fronts, the Biden administration doesn't plan to escalate trade tensions.
What We’ve Been Reading...
This is what’s caught our eye over the past 24 hours:
And finally, here’s what Tracy’s interested in today
The word of the day in China markets is “contagion.” On Monday, shares of China Evergrande were suspended pending a major transaction (reportedly the purchase of a controlling stake by Hopson Development). It's unclear whether the struggling property developer made payment on a $260 million note that it guaranteed and which came due over the weekend. Meanwhile, another Chinese real estate company seems to be lurching towards crisis. Fantasia failed to repay a $205.7 million bond that was due Monday, sending prices on its outstanding debt tumbling and adding to concerns over the property sector overall. And builder Sinic has received a demand to repay some debt after missing two local interest payments.
There's an argument to be made that China has been attempting to flush out and then ringfence the weaker players in its overindebted real estate industry. Most recently, authorities have tried to limit the fallout by buying part of an Evergrande stake in a struggling bank and nudging other lenders to support the property sector. And of course, they introduced the three red lines policy last year, encouraging developers to cut back on their debt and strengthen their balance sheets. Now, as contagion threatens, we might get to see how successful those measures have been.
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