When one of China’s biggest property developers wanted to raise $300mn in Hong Kong late last month, JPMorgan Chase seemed to have everything ready. The Wall Street bank had lined up investors for the Country Garden share sale, and published a term sheet with a fixed price.
It launched the deal on a Monday evening. Shortly afterwards, Country Garden walked away, cancelling the deal in a highly unusual move. The developer, which is based in Guangdong and listed in Hong Kong, had issued a profit warning earlier that day. It has since missed bond coupon payments and suspended trading in some of its bonds.
The deal’s collapse has drawn attention to a bigger problem for US investment banks. Selling shares in Chinese companies offshore used to be such a money-spinner that it made up a huge share of the banks’ Asian revenues and helped subsidise an expensive presence in smaller markets. But they no longer do much of that business at all.