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Evergrande Makes Overdue Interest Payments

The Chinese government worries that Evergrande's debt crisis could pose systemic risks. Reuters
The Chinese government worries that Evergrande's debt crisis could pose systemic risks. Reuters
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Evergrande Makes Overdue Interest Payments

The Chinese government worries that Evergrande's debt crisis could pose systemic risks. Reuters
The Chinese government worries that Evergrande's debt crisis could pose systemic risks. Reuters

Chinese developer Evergrande met a deadline to pay overdue interest on three US-dollar bonds before their grace periods ended, a report said Thursday, signalling it had averted another potential default and triggering a rally in the troubled firm's shares.

Evergrande shares bounced up in Hong Kong morning trade and were around seven percent up by mid-afternoon, according to AFP.

All eyes had been on the heavily indebted company as it faced a Wednesday deadline for $148 million in coupon payments -- after missing the initial due dates last month.

The liquidity crunch at one of China's biggest property developers has battered investor sentiment and rattled the country's key real estate market, adding to fears of wider contagion.

The 30-day grace periods for the latest interest payments were to end on Wednesday, but customers of international clearing firm Clearstream reportedly received their payments, Bloomberg News reported.

Two investors holding two of the bonds confirmed that they received the payments, Bloomberg added.

Clearstream did not immediately respond to AFP's request for comment.

In October, the company swerved past more looming defaults by making overdue interest payments to offshore bond-holders.

Bogged down in liabilities worth more than $300 billion, the Shenzhen-headquartered developer has been trying to dispose of its assets to raise cash.

It earlier managed to raise around $144 million by slashing its stake in an internet company, with stock exchange filings showing it sold a 5.7 percent stake in HengTen Networks Group in three separate transactions.

Evergrande is among a number of Chinese developers caught in a crackdown on speculation and leverage in the country's colossal property sector, working to rein in excessive debt.

But authorities appear now to be rolling back some of these regulations.

A series of articles published in state media this week suggested more support measures to help developers tap debt markets, with the Securities Times reporting Wednesday that bank lending has been relaxed to make it easier for property companies to raise cash.

The China Securities Journal, Shanghai Securities News and Securities Times all carried similar reports Thursday on their front pages, detailing October credit data from the central bank and saying lending to developers rose in October.

Analysts told state media that the new data showed some loosening of housing financial policies alongside an increase in personal housing loans.

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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s digital advertising sector is experiencing rapid growth, but a significant portion of its revenues is leaking to foreign platforms. To maximize the impact on the national economy, experts are calling for strategies to curb this outflow and redirect it to local channels.

The importance of retaining digital ad revenues lies in the substantial size of this market. It is estimated that approximately $1 billion in ad spent is lost annually to foreign platforms, representing a considerable loss to Saudi Arabia’s economy.

Dr. Ebada Al-Abbad, CEO of Marketing and Communications at Tadafuq, a Saudi digital advertising network, told Asharq Al-Awsat that the problem stems from the fact that although advertisers, products, and audiences are often local, the largest share of financial gains goes to foreign platforms. He estimated that 70-80% of the $1.5 billion spent on digital advertising in Saudi Arabia in 2022 went to global platforms such as Google and Facebook. This results in the national economy losing nearly $1 billion annually from this sector alone.

Al-Abbad noted that government agencies in Saudi Arabia also contribute to the outflow. He explained that public sector spending on digital advertising, intended to raise awareness among citizens and residents, frequently ends up on foreign platforms. Government spending makes up about 20-25% of the total digital ad market in the Kingdom, meaning hundreds of millions of riyals leave the country annually, weakening the local digital economy.

Al-Abbad argues that Saudi Arabia needs strong local digital ad networks to keep this revenue within the national economy. These networks would help create jobs, drive innovation, and promote cultural diversity in digital content. Developing local platforms would also enhance Saudi Arabia’s digital sovereignty by ensuring that data remains within the country and is not controlled by foreign entities.

Moreover, local networks would reduce dependence on international platforms, ensuring that the economic benefits of digital advertising remain in the Kingdom, he said, stressing that this would align with Saudi Arabia’s broader Vision 2030 goals, which emphasize building a robust, diversified economy driven by local industries and digital transformation.

Globally, the digital advertising sector is growing rapidly. In 2022, worldwide spending on digital ads reached $602 billion, and it is projected to hit $876 billion by 2026. In the Middle East and North Africa (MENA) region, the digital ad market grew to $5.9 billion in 2022, with Saudi Arabia’s market accounting for over $1.5 billion.

In other countries, the digital ad sector plays a crucial role in boosting national economies. For example, in the United States, the digital advertising industry contributed $460 billion to the GDP in 2021, about 2.1% of the total. In the UK, the sector accounted for 1.8% of GDP in 2022. This shows how important digital advertising can be in driving economic growth.

One of the key challenges facing Saudi Arabia’s digital ad sector is the dominance of global platforms like Google and Facebook, which control 60% of the global digital ad market, Al-Abbad told Asharq Al-Awsat. This dominance results in a significant outflow of revenue and allows these platforms to control digital data and content. He warned that this could undermine Saudi Arabia’s national sovereignty over its digital economy.

To counter this, he emphasized that Saudi Arabia needs to build competitive local networks that can retain a larger share of the market. This will not only keep more revenue in the country but also strengthen the Kingdom’s control over its digital data and content.