Evergrande jitters ebb and flow as company misses key bond payment

Fears that a Chinese real estate developer's possible default on multibillion-dollar debts might send shockwaves through global financial markets appeared to ease Thursday as creditors waited to see how much they might recover.

Shares of Evergrande Group, one of China's biggest private sector conglomerates, rose 18 per cent in Hong Kong after the company said it would pay interest to bondholders in China. The company gave no sign whether it would make a payment due Thursday on a separate bond abroad.

Evergrande's struggle has raised fears it might destabilize China's financial system and set off a global chain reaction. But economists said while banks and other creditors would lose money, there appeared to be little way a default on its  $310 billion US in debt would hurt the Chinese system or feed through to markets abroad.

"It's definitely a local problem in China," said Robert Carnell, head of Asian research for ING.

"There will be some suppliers and others who will go bust," Carnell said. "But it's not systemic in a sense that I can put my finger on."

Chinese regulators have yet to announce what Beijing might do. But despite that, plus uncertainty about how much banks and individual buyers of Evergrande's bonds might lose, stock markets appeared to recover from anxiety that caused Chinese stocks to tumble on Monday.

China's benchmark Shanghai Composite Index closed 0.4 per cent higher on Thursday. Hong Kong's Hang Seng rose 1.2 per cent. Markets in Australia and Southeast Asia, where economies depend heavily on trade with China, also rose.