Is Hong Kong’s New World Too Big to Fail?
There might be a happy ending if the developer is deemed more important than China Evergrande.
New World apartments in southern Hong Kong Island sold in a few hours.
Photographer: Lam Yik/BloombergNew World Development Co.’s financial distress is creating angst just as Hong Kong is starting to regain its feet.
The real estate developer’s systemic importance is of great concern to residents, policymakers and investors alike. Property fire sales at New World could drag down home prices further, while a potential default will impair banks’ loan books. But for the company’s $4.5 billion perpetual bond holders, there’s a possible happy ending if the builder is deemed too big to fail: An equity injection from Chinese state-owned enterprises or the Hong Kong government would make their day.