HONG KONG (Reuters) -Shares of New World Development ( NWWDF ) rallied in early trading on Monday after the major Hong Kong developer said it would increase cash flow and cut debt as it reported an interim net loss of HK$6.63 billion ($852.63 million).

The shares gained as much as 11.4% by 0200 GMT to HK$5.37, the highest since Dec 27.

The company said on Friday that it plans to accelerate property sales and diminish capital expenditure, and that it talking with banks about refinancing terms. It said it expects the waivers to comply with certain financial covenants to be extended.

With net gearing rising above 88%, New World has some of the highest debt ratio in the sector, and the financial markets are worried any deepening of its debt problems could trigger a crisis reminiscent of the one in mainland China that started in 2021 and led to scores of company defaults.

($1 = 7.7759 Hong Kong dollars)