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Today's business and finance round up 22nd September 2021

🌏Chinese property giant sends global shockwaves

September 22, 2021

22nd September 2021

Good morning Today marks the 100th edition of Market Loop!🎉 Huge thanks for reading and for being a part of this journey to make business and finance news more digestible. As a present it would be great if you could share and recommend the newsletter with friends (or even enemies).Here's to the next hundred!

Today's stories

  • Chinese property giant sends global shockwaves

  • Ladbrokes owner in £15bn takeover bid

PROPERTYChinese property giant sends global shockwaves

What’s going on?This week Evergrande, China’s second-biggest property developer is teetering on the brink of collapse as it struggles to repay its debt.News of its potential demise has spooked investors worldwide and rocked global stock markets.

Why is this important?

As one of the largest property firms in the most populous nation, Evergrande has huge operations, it:

  • Had sales of $120bn in 2020

  • Runs over 1,000 projects in 280 cities across China

  • Accounts for 2% of China’s real estate

  • Alongside residential property it operates in health care, theme parks and electric car manufacturing.

But all this growth has left it strapped for cash, it has nearly $300bn in debt and $129m in interest payments due this month alone which seem unlikely to be paid.Things have gotten so dire that apparently, it’s started paying suppliers with apartments.Investors are concerned that due to its size, Evergrand’s collapse would drag down the rest of China’s economy and, potentially, global markets too. China’s property sector accounts for over a quarter of its economy, and Evergrande’s demise would send shock waves through the economy.So far this week Evergrande’s shares have fallen 20% to a decade low and global stock markets also had their worst performance in months.TakeawayThe next few days will be crucial for Evergrande, will the Chinese government step in to bail it out or will it leave it to fail?Many have drawn comparisons to 2008 when US investment bank Lehman Brothers declared bankruptcy, sending global markets into a tailspin.Evergrande’s debt is held by banks in the UK, US, Canada and Australia so its collapse could send shockwaves around the world.

LEISURELadbrokes owner in £15bn takeover bid

Yesterday rumours started swirling that Entain, owner of bookmaker chains Ladbrokes and Coral, had been approached by US gambling firm DraftKings for a £15bn takeover.Entain’s shares jumped 20% on the news and the company later confirmed that it had received an offer but didn’t confirm the price.It’s the second time Entain has been involved in takeover talk this year. Back in January it had rejected an approach from America's MGM Resorts for £8bn saying it undervalued the business.DraftKings launched in the US in 2012 as a fantasy sports league business but has since become an online gambling company, with revenues close to $1bn.The offer comes at a time when American bookmakers are looking to expand internationally and acquire the expertise of British firms as America opens up to sports betting. Rival William Hill has already been sold to US owners for £3bn this year. Analysts predict that a bidding war could be on the cards for Entain. MGM could come back with a better offer to challenge DraftKings’.

Stat of the day

Virgin Atlantic has reported a 600% surge in flight bookings to the US since the announcement of a relaxation in travel for Brits

Other stories to keep you in the loop

  • Food industry welcomes deal to restart CO2 production

  • UK forced to borrow more than expected as soaring inflation bites

  • BT shares jump as ‘Netflix for sport’ platform DAZN nears BT Sport deal

  • Plans to allow workers to work from home from day one

  • National Express and Stagecoach in merger talks

  • Uber on course to post first profitable quarter

  • Justin Trudeau wins Canada election but falls short of a majority

Interesting links from around the web

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