China asks Ping An to take stake in Country Garden

The news: Chinese authorities have reportedly asked insurance group Ping An to help rescue Country Garden by taking a controlling stake in the embattled Chinese property developer.

The numbers: While Ping An denied the Reuters story, its Hong Kong-listed shares finished 5.4% lower on Wednesday after the news, while Country Garden shares surged 12.2%. Country Garden had total liabilities of 1.4 trillion yuan ($297 billion) at the end of June. It has more than 3,000 projects under development nationwide.

The context: China’s biggest property developer last month missed a deadline to pay a $15 million coupon and the market has deemed it to be in default on its offshore bonds which total some USD11 billion. Authorities are keen that any risks posed by Country Garden's liquidity problems should not spill over to the wider economy, sources told Reuters. Ping An has been asked to conduct due diligence on Country Garden, and take more than 50% stake, the report said. A state-engineered rescue of Country Garden by Ping An would be one of the most significant interventions to date by authorities to support the cash-squeezed and highly indebted property sector, which accounts for one-quarter of China's economic activity and has sparked fears of a broader financial crisis.