Evergrande shares were suspended from trading for almost a year and a half. Now the shares of the Chinese real estate developer are reported back on the stock exchange – with a historic drop in prices. Shares in the world’s most indebted real estate developer fell nearly 87 percent in Hong Kong on Monday, trading at an all-time low of HK$0.22. As a result, the market value contracted by the equivalent of around 2.2 billion to 342 million euros. In 2017, the market capitalization was at times almost 50 billion euros.
Evergrande, which is currently sitting on a mountain of debt of around 303 billion euros, announced on Friday that it had “appropriately” met all the requirements for a resumption of trading. This includes, among other things, the publication of outstanding financial reports. The former industry leader in the People’s Republic thus averted a forced withdrawal from the Hong Kong stock exchange. But the company is far from over the mountain, warned financial market expert Steven Leung from the brokerage house UOB-Kay Hian. “There is little hope that Evergrande will be able to repay its debts by selling apartments alone.” Chinese buyers preferred state real estate developers. In addition, Evergrande will not be able to benefit from government economic aid.
Courts must decide on debt restructuring
According to information from the weekend, Evergrande halved the loss to the equivalent of 4.2 billion euros in the first half of 2023. At the same time, sales increased by 44 percent to 16.3 billion euros. The further future depends on an extension of repayment periods and a successful rescheduling of foreign liabilities. Courts in Hong Kong and on the Cayman Islands are to decide on the latter in September.
Evergrande got into trouble at the end of 2021 and was no longer able to service its debts. A few weeks ago, the group applied for bankruptcy protection in the United States because the foreign debt totaled almost 30 billion euros. China’s real estate industry as a whole is now in crisis. Recently, Country Garden hit the headlines. The real estate developer, which specializes in projects in smaller cities, stopped trading in some of its bonds after warning of a loss of up to seven billion euros in the first half of the year. Overall, Country Garden is in debt with the equivalent of around 179 billion euros.