By Clare Jim

HONG KONG (Reuters) – China Evergrande Group lost $2.2 billion, or 79% of its market value, on Monday after its shares resumed trading in a crucial step for the world’s most indebted property firm to restructure its offshore debt.

Evergrande is at the centre of a crisis in China’s property sector that has seen a string of debt defaults since late 2021, and its stock has been suspended for 17 months.

The developer, which is in the process of getting approvals from creditors and the courts to implement the debt restructuring plan, said on Monday it would postpone by a month meetings for these creditors to vote on the proposal to give more time “to maximise creditor engagement and support informed-decision making”.

The scheme meetings will now take place on Sept 26, instead of Monday, but three people with direct knowledge of the matter said many creditors had already registered their vote by a deadline last Wednesday to submit forms.

Evergrande needs approval from more than 75% of the holders of each debt class to approve the plan, which offers creditors with a basket of options to swap debt for new bonds and equity-linked instruments backed by its stocks and those of its Hong Kong-listed units.

Its Hong Kong listed shares closed down 79% to HK$0.35 on Monday. Market capitalisation shrank to HK$4.6 billion ($586.29 million) from HK$21.8 billion ($2.78 billion) from when it last traded.

PROPERTY DOWNTURN

Evergrande’s valuation hit an all-time high of close to HK$420 billion in 2017.

The stock has been suspended since March 21, 2022, and resumed trading after the company said it had fulfilled all conditions by the Hong Kong Stock Exchange.

Its units, China Evergrande New Energy Vehicle Group and Evergrande Property Services Group, have both resumed trading in the past month after a 16 month halt.

Evergrande would have faced delisting if the suspension had reached 18 months.

“Going forward things will continue to be difficult for both its operations and share performance,” said Steven Leung, Hong Kong-based director of UOB Kay Hian.

“There’s little hope that Evergrande can rely on selling houses to repay debt because homebuyers would prefer state-owned developers, and it won’t be able to benefit from stimulus policies.”

The deepening of debt crisis in the property sector has weighed on the recovery of China’s economy, putting more pressure to policymakers to roll out stimulus measures. The government has so far relaxed residential housing loan rules and supported affordable housing, briefly cheering investors.

The Hang Seng Mainland Properties Index rose more than 6% in early morning session, before closing up 0.1%

However, China’s new home prices will likely show no growth this year, according to a Reuters poll.

“We haven’t seen meaningful improvement in the property market’s fundamentals,” said Mark Dong, Hong Kong-based general manager of Minority Asset Management, which manages more than $1 billion in assets. The firm has cut its holding in property stocks, Dong said.

Evergrande’s trade resumption also came after the developer on Sunday reported a narrower net loss for the first half of the year due to a rise in revenue.

Evergrande also posted a combined net loss of $81 billion for 2021 and 2022 in a long-overdue earnings report last month, versus an 8.1 billion yuan profit in 2020.

As with Evergrande’s previous two annual financial statements, auditor Prism Hong Kong and Shanghai has not issued a conclusion on this report, citing multiple uncertainties relating to the business as a going concern.

($1 = 7.2834 Chinese yuan renminbi)

($1 = 7.8447 Hong Kong dollars)

(This story has been refiled to remove extraneous words in headline)

(Reporting by Clare Jim; Additional reporting by Xie Yu and Donny Kwok; Editing by Kim Coghill and Christopher Cushing and Miral Fahmy)

By Priyamvada C

(Reuters) -The U.S. trucking industry may begin to see an uptick in freight demand in the back half of the year after grappling with another quarter of lower profits due to a slump in package volumes, company executives and analysts said.

The expectations have been largely fueled by U.S. retailers’ comments on their improving inventory position and prospects of better inbound container shipments.

Companies ranging from Target to Macy’s have signaled that they have largely moved past their bloated inventory issues from a year earlier as retailers look to stock up on in-demand products ahead of the crucial holiday season.

Meanwhile, a drop in volume of large containers handled by U.S. ports compared to last year is also set to narrow in the coming months, according to the National Retail Federation, indicating retailers are preparing for increased demand during the year-end holiday period.

“Most of our retail customers have worked through that inventory…so it does look like the freight markets have troughed from a demand perspective,” said logistics firm XPO’s chief Mario Harik, adding that freight markets could recover into 2024.

XPO, which serves companies such as Ulta Beauty, said it saw shipment count and tonnage flip to positive in July, indicating the start of a slightly improved freight demand environment.

Old Dominion Freight Line Chief Financial Officer Adam Satterfield also expressed similar views last month on inventory.

“We get the sense that inventory levels are normalizing a bit,” Satterfield said in an earnings call.

Freight demand slumped last year after a surge during the pandemic-induced shift to online shopping as customers returned to stores and household budgets were pressured by sticky inflation.

This led to retailers moving to stop an inventory pileup, sending a ripple effect on trucks and railroads that move the goods.

“I don’t know that we’ve ever seen freight demand fall this far so fast and for so long without an accompanying economic recession,” logistics firm Knight-Swift Transportation chief David Jackson said in a post-earnings call with analysts.

As a result, adjusted net income at trucking firms such as JB Hunt, Old Dominion, CH Robinson and XPO fell between 22% and 69% in the second quarter from a year earlier.

The second quarter was the most challenging for trucking firms in recent times, analysts and industry executives said, owing to high wage costs and ultra-low spot rates, or the current market price for a one-time freight shipment.

But there is light at the end of the tunnel.

“We’re still in the worsening part of the down cycle.. but by the time we get into next year, we’ll be returning to growth,” said Tim Denoyer of market research firm ACT Research.

Knight-Swift said a combination of demand recovery as import volumes return to more normal levels and supply reduction should lead to improving freight market conditions in the near future.

“There are still some areas where retail inventories are too high, but more and more categories will need restocking as time progresses,” ACT Research’s Denoyer said.

Meanwhile, the demise of Yellow Corp, the third-biggest U.S. trucking company, may also help prop up rates for rivals such as XPO, FedEx Freight, and Old Dominion among others, analysts said.

(Reporting by Priyamvada C in Bengaluru, additional reporting by Aishwarya Venugopal; Editing by Sriraj Kalluvila)

By Yew Lun Tian

BEIJING (Reuters) – China’s bankers and business executives have become increasingly reliant on domestic capital in recent years as foreign funding has dried up, but a popular way to unlock that cash may very well involve “throwing eggs”.

The term refers to Guandan, a poker-like card game that has been around for decades, but has gained fresh life among venture capitalists a few years ago as they awoke to its popularity among wealthy local government officials in eastern regions.

“Officials like this game, so we play along,” said Yang Yiming, an investment banker whose job involves canvassing government funding for projects linked to semiconductors and defence.

The growing interest in business circles has spawned a craze for the game nationwide, driven partly by financial constraints stemming from souring ties with China’s biggest trade partner, the United States.

This month U.S. President Joe Biden barred some investment in semiconductors and set controls on other sensitive sectors, aiming to curb trade and funding that could give rival Beijing an edge in technology.

Total U.S.-based venture-capital investment in China plummeted to $9.7 billion last year from $32.9 billion in 2021, PitchBook data shows.

Domestic private capital has also dwindled as President Xi Jinping signalled his preference for a bigger state presence in the economy by launching crackdowns over the last few years in areas from technology to real estate and private tutoring.

As investment prospects darken, financiers increasingly view the game as a way to build ‘guanxi’ or connections with officials who hold the purse strings on local projects, especially those overseas investors might consider too risky.

“In finance, information is currency,” said Yang, for whom a game of guandan has become a standard gambit before wining and dining local officials.

“During a game which can stretch for hours, we are bound to chit-chat, and sometimes useful information gets passed around after people feel comfortable and trust you.”

Yu Longze, a broker based in Beijing, said his boss this month ordered all staff to learn the game.

Like bridge, the classic staple, the game is played among four players paired up in teams. Using two decks, players must throw down poker and other special card combinations to clear their hands before opponents.

“From observing someone’s playing style, you can tell if he is smart, aggressive or a team player. This can help you decide if you want him as a business partner,” said a businessman surnamed Huang, who runs a private clubhouse where the game has become a favourite pastime of officials and company executives.

But not everyone treats guandan as a business tool.

Many players say they simply enjoy the mental stimulation from a game that is cheap, convenient to play and allows them to socialise – aspects that, taken together, explain its appeal to all walks of life.

Customers ranged from retired people to young professionals seeking to build new social ties, said Hua Min, who this year opened the first bar dedicated to hosting guandan games in Beijing, the capital.

Li Keshu, a lawyer, said playing with his friends in a park helped get through the social isolation and economic frustration of the COVID-19 years, when China threw up strict barriers against infection.

“It’s cost-free. Unlike ‘Texas Hold’em’ or mahjong, this game doesn’t need to be played with money to be fun. On the contrary, money spoils the friendship and the game.”

While the players Reuters spoke to said they do not gamble, Chinese officials have been censured in the past for receiving bribes through the playing of card games or the traditional tile pastime of mahjong.

In April, the ruling Communist Party’s anti-graft watchdog censured one of its officials in the eastern province of Anhui for playing guandan during a training course, among other misdeeds.

In a sign that Beijing is not perturbed by the growing interest in the game, however, China’s national sports authority has organised the first nationwide guandan competition this year.

(Reporting by Yew Lun Tian; Editing by John Geddie and Clarence Fernandez)

By A. Ananthalakshmi and Yantoultra Ngui

KUALA LUMPUR/SINGAPORE (Reuters) -Embattled Chinese developer Country Garden said on Monday its $100-billion project in Malaysia was proceeding as planned and it had sufficient assets, despite concerns about its financial strength amid debt woes.

The comment by China’s largest private developer came after it missed two dollar coupon payments this month totaling $22.5 million, fuelling fears that the country’s property debt crisis could hamper a broader economic recovery and spill overseas.

“Our company’s projects in Malaysia are operating normally and the sales performance is strong,” the developer’s Singapore and Malaysia unit said in a statement, adding that its overall operation in the region was “safe and stable.”

“Various debt management measures are considered to actively resolve the pressure of periodic liquidity, to ensure the company’s long-term future development,” it added, without elaborating.

Banks incorporated in the Southeast Asian nation had limited exposure to Country Garden, Malaysia’s central bank said, adding that its Malaysia unit was servicing loans promptly.

“The current development with Country Garden Holdings Ltd in China is not expected to pose any material impact on the overall property market activity and prices in Malaysia,” Bank Negara Malaysia told Reuters in an email.

The Chinese developer is building its largest overseas development, the massive Forest City project, across four reclaimed islands in the southern Malaysian state of Johor bordering the wealthy city state of Singapore.

Beset by challenges since its 2016 launch, the project, now home to about 9,000 people, saw demand fall sharply following China’s move to stem capital outflows and the COVID-19 pandemic.

Malaysians have also expressed concern at the prospect of a housing glut and environmental damage from a huge land reclamation effort.

The project aims to house 700,000 people by 2035 in a development that includes office towers, malls and schools, besides residential buildings.

The company statement comes after Malaysian Prime Minister Anwar Ibrahim said the project would be designated a “special financial zone” to attract investment, and help cut the cost of doing business there.

Among the new incentives offered are a special income tax rate of 15% for skilled workers and multiple entry visas, Anwar said in a statement on Friday.

RHB analyst Loong Kok Wen said the new designation would attract companies and residents from Singapore, where costs are considerably higher.

“This move should help to revitalise the Forest City township, which has received lots of negative publicity over the last few years,” the analyst said.

Malaysia’s incentives should be “very positive” for Country Garden, said Steven Leung, Hong Kong-based director of UOB Kay Hian.

The Chinese developer said the incentives from Anwar’s government showed its confidence in the project, which was now in a second phase of development focused on exploring more investment opportunities.

Shares of Country Garden closed flat after having risen as much as 9% on Monday.

Forest City is a joint venture with Esplanade Danga 88, a private Malaysian company backed by the Johor government and the sultan of the state.

(Reporting by A. Ananthalakshmi, additional reporting by Clare Jim in Hong Kong; Editing by Martin Petty, Anne Marie Roantree and Clarence Fernandez)

By David Shepardson

BEIJING (Reuters) -U.S. Commerce Secretary Gina Raimondo opened talks with Chinese government officials on Monday, saying it is “profoundly important” for the world’s two largest economies to have a stable economic relationship.

Raimondo is looking to boost business ties as U.S. firms have reported increasing challenges with operating in China, while China has sharply criticized U.S. efforts to block its access to advanced semiconductors.

Raimondo said the world expects the United States and China will have a stable economic relationship; the two countries share more than $700 billion in annual trade.

“It’s a complicated relationship. It’s a challenging relationship. We will of course disagree on certain issues,” Raimondo said. “I think we can make progress if we are direct, open and practical.”

Raimondo, who is holding three days of talks with Chinese and business leaders to boost ties, met with Commerce Minister Wang Wentao on Monday for just over two hours.

Wang said US-China economic relations matter not just to the two countries, but also the rest of the world and expressed appreciation of Raimondo’s remarks that she likes trade with China.

He said he was ready to work together to “foster a more favorable policy environment for stronger cooperation between our businesses to bolster bilateral trade and investment in a stable and predictable manner.”

Raimondo said the United States and China have “worked over the summer to establish new information exchanges and working groups that will enable us to have more consistent engagement in our relationship.”

Some Republicans in Congress have criticized the suggestion that the United States would agree to a working group with China on export controls on advanced semiconductor chips.

Raimondo has declared off-limits any discussion of U.S. export curbs aimed at slowing Beijing’s military advances.

“Of course, of matters of national security there is no room to compromise or negotiate,” she said, adding the vast majority did not impact national security concerns.

At an event later on Monday, Raimondo showed off a number of personal care products made by U.S. companies and sold in China to make the case that trade can flourish outside products with national security implications, and said 99% of trade between the two countries is unrelated to export controls.

“No one can argue that health and beauty aids interfere in our national security,” she said. “The plan, and the hope, is that our commercial relationship, if done right, can stabilize the political relationship.”

(Reporting by David Shepardson; Editing by Michael Perry, Clarence Fernandez and Mike Harrison)

(Reuters) -Bruised bond market investors will seek some solace from U.S. jobs data and European inflation numbers out in the week to come, while China is battling to shore up its markets and economy, and the outlook for grains is uncertain.

Here’s a look at the week ahead in markets from Lewis Krauskopf in New York, Kevin Buckland in Tokyo, Yoruk Bahceli in Amsterdam, and Nigel Hunt and Dhara Ranasinghe in London.

1/HOT, COLD – OR JUST RIGHT?

    With Treasury yields surging and stocks wobbling, major data in coming days will test the U.S. economy’s temperature as investors worry that the Federal Reserve may keep interest rates higher for longer.

    The August employment report out on Friday takes centre stage: July non-farm payrolls showed the economy added fewer jobs than expected, but solid wage gains and a declining unemployment rate to 3.5% pointed to continued tightness in labor market conditions.

    Other data such as consumer confidence, the state of manufacturing, and inflation, with the latest personal consumption expenditures index is also due.

    The readings will come on the heels of Jerome Powell’s warning at the annual Fed confab in Jackson Hole, Wyoming, that the world’s top central bank may need to raise interest rates and 10-year U.S. Treasury yields hitting their highest since 2007.

2/ THE TOUGH PART

For a year it was a no-brainer that the ECB would be hiking rates to contain high inflation — its key rate rose swiftly to 3.75% from below 0%.

Now comes the tough part as the economy sputters. Data showing a slide in business activity has convinced many traders that a pause in September is likely. Yet Thursday’s flash euro area August inflation number, which follows releases from some member states, could be the decider.

Euro zone consumer prices rose by 5.3% in July versus 5.5% in June, extending a downtrend that started last autumn. The closely-watched underlying gauge was flat at 5.5% but services inflation rose.

Germany’s Bundesbank has warned of a growing risk that consumer price growth gets stuck above 2%. August’s 20% surge in European gas prices suggests disinflation could be slow. It is too soon to rule out a September hike.

3/ PARTING WAYS

Bond investors are keen to leave behind a painful August that saw a rethink of how long rates will stay higher as a strong U.S. economy put the recession fund managers have long pined for even further out of reach.

Longer-dated U.S. Treasury yields soared to a 16-year high and real rates, adjusted for future inflation, jumped above 2% for the first time since 2009, unnerving stock markets.

But just as investors were digesting that narrative, a deepening downturn in business activity pointed to more pain ahead for Europe’s stumbling economies, prompting double-digit drops in British and German bond yields in recent days.

Now, benchmark 10-year U.S. Treasuries are set for their worst monthly performance since February, with yields up nearly 30 basis points in August. But a gloomier outlook has seen smaller rises in German and British yields.

4/ A GIANT SHIP China is taking ever more steps to revitalize drooping equities, a languishing currency, a teetering property market, and a floundering economy – except the big one investors want: bold fiscal stimulus. Recent days have seen more than 100 A-share companies reportedly announcing buybacks at the request of regulators keen to shore up market confidence. The PBOC has set much stronger-than-expected mid-points for the yuan, building a floor above recent 9 1/2-month lows. Real estate is at the centre of the storm – silent Country Garden development sites show the sector’s sorry state. Some developers don’t have the cash to pay workers – or debt obligations. President Xi Jinping told a BRICS summit that China’s economy is a “giant ship” that will “forge ahead.” PMIs on Thursday and Friday will give the latest evidence of any leaks.

5/ BITTER SWEET

El Nino – having emerged for the first time in seven years – is posing a growing threat to global food supplies with the U.S. Climate Prediction Center saying that the weather phenomenon is expected to strengthen through the winter of 2023/24.

India’s monsoon rains have suffered, with this month set to be the driest August since records began in 1901. The world’s most populous country is already concerned about the threat to production of several basic commodities, including rice and sugar.

India’s export ban of non-basmati white rice last month sent global prices sharply higher and the country is expected to prohibit mills from exporting sugar from October.

Agricultural production in other Asian countries, including major palm oil and coffee producer Indonesia, and Thailand – one of the world’s top sugar exporters – is also expected to be hit by dry weather in coming months.

(Compiled by Karin Strohecker; Editing by Sharon Singleton)