SHANGHAI -- Chinese stocks on the mainland opened lower Wednesday, as uncertainty continues to swirl around indebted property developer China Evergrande Group, which has promised to make a key bond payment this week.
After a two-day national holiday, the Shanghai SE Composite Index resumed trading at 3,563.21, down 1.4% from Friday's close. The index was weighed down by financial and property stocks, as investors assessed spillover risks related to the debt crunch at the property developer. Markets in Hong Kong were closed Wednesday for a holiday.
Evergrande's main unit, Hengda Real Estate Group, said in a filing to the Shenzhen exchange on Wednesday that it will pay interest due on a 40 billion yuan ($6.2 billion) bond on time on Thursday. However, the group also has an $83.53 million coupon payment on an offshore dollar bond that is due on Thursday, but the filing made no mention of this bond.
The Taiwan stock exchange also took a hit, falling about 2% in Wednesday morning trading. Shares of Taiwan's two biggest chipmakers, Taiwan Semiconductor Manufacturing Co. and MediaTek, dropped 2% and 3.82%, respectively, at one point. Cathay Financial Holdings, the biggest banking group by market cap in Taiwan, saw its stock price plunge nearly 4%, while the biggest steelmaker, China Steel, saw similar turmoil. The Taiwan exchange was also closed on closed Monday and Tuesday for the mid-autumn festival holiday.
Evergrande on Tuesday urged its staff to help get the company out of this "dark moment" and meet the expectations of homebuyers, investors, business partners and financial institutions.
"With one heart, we could move Mount Tai," Evergrande founder and chairman Xu Jiayin wrote in an internal memo, referring to a mountain worshipped as a symbol of stability.
Speculation surrounding Evergrande's potential default on upcoming bond coupon payments has stirred market turmoil in Europe, the U.S. and elsewhere in recent days. Citi Research in a Tuesday report said concerns over weakness in other Chinese real estate companies and a slowdown in growth were behind investor worries. Citing previous interventions in Baoshang Bank and state-owned enterprise Yongmei, Citi's economists led by Johanna Chua in Hong Kong expected the government to intervene to prevent Evergrande's troubles from spreading.
Additional reporting by Cheng Ting-Fang in Taipei