Stocks and bonds gain as China acts on debt

investmentnews.com:

Stocks and bonds rose as China moved to address a worsening property slump, shoring up confidence in global markets.  

US and European equity futures advanced, while bond yields ticked lower. The moves came after China’s banking regulator announced it would set up a task force to examine risks at Zhongzhi Enterprise Group Co.

The company, one of the nation’s largest largest private wealth managers, had missed payments on investment products sold to high-net worth clients and corporations. That came as news broke that Chinese developer Country Garden Holdings Co. is seeking to extend a maturing bond for the first time.

That came as news broke that Chinese developer Country Garden Holdings Co. is seeking to extend a maturing bond for the first time. 

“It’s such a significant financial shock to the system that the authorities will do everything they can to contain it,” said Andrew Bell, chief executive officer at Witan Investment Trust. “I suspect the risk of contagion beyond China is pretty low. But it is another reason for markets to be a little bit cautious over the summer.”

Country Gardens is soliciting some bondholders’ feedback on a proposal to extend payment of a yuan note due Sept. 2, people familiar with the matter said, asking not to be identified discussing a private matter. Once China’s largest private-sector developer by sales, the company is at risk of joining a slew of defaulters if it fails to make coupon payments on two dollar bonds within a 30-day grace period. 

Shares in mainland China declined while almost all of the 80 members of Hong Kong’s Hang Seng Index slipped Monday. The CSI 300 Index, which is the benchmark of onshore Chinese shares, is now close to erasing all of the gains it made after the