- Evergrande’s Shares Plummet Nearly 80% on Return to Hong Kong Trading
- Company Reports a 33 Billion Yuan Loss for the First Half of the Year
- China Takes Measures to Address Real Estate Market Crisis and Boost Investor Confidence
On their first day of trading in Hong Kong in over a year and a half, shares of the troubled Chinese real estate developer Evergrande fell by almost 80%.
In the past three years, the shares have lost more than 99 percent of their value due to Beijing’s crackdown on property firms.
Evergrande is at the heart of a real estate market crisis that threatens the second-largest economy in the world.
The company reported a loss of 33 billion yuan ($4.5 billion; £3.6 billion) for the first half of the year on Sunday.
However, this was an improvement from the 66.4bn yuan loss reported during the same period a year prior.
Evergrande stated in a filing with the Hong Kong Stock Exchange that the company’s directors “have taken several steps to strengthen the group’s liquidity and financial position.”
The company added that its revenue for the first half of this year increased by 44% to 128.2bn yuan from the same period last year. However, its currency on hand decreased by 6.3% during the same period.
Trading of Evergrande shares had been suspended since March of last year.
“The key for policymakers at this time is to prevent financial contagion and limit its impact on the entire financial system,” said Qian Wang, chief Asia-Pacific economist at investment firm Vanguard.
“Policymakers will need to provide further liquidity and credit support to the economy and real estate sector,” she added.
Chinese property market troubles have raised concerns about the world’s second-largest economy’s post-pandemic recovery.
China halved a 0.1% tax on stock trading on Monday to “revive the capital market and boost investor confidence.
The move occurred days after the country’s central bank lowered one of its main interest rates for the second time in three months in response to declining exports and consumer spending.
Following the news, major stock indexes in Hong Kong and mainland China rose.
In 2021 and 2022, Evergrande lost a total of 581,9 billion yuan, the company reported last month.
Country Garden, one of China’s largest property developers, warned earlier this month that it could lose up to $7.6 billion (£6 billion) in the first half of the year.
Moody’s downgraded the company’s rating, citing “heightened liquidity and refinancing risks”
In 2020, new regulations limiting the amount of money that large real estate firms could borrow shook China’s real estate industry.
Evergrande, once China’s top-selling developer, amassed more than $300 billion in obligations as it aggressively expanded to become the country’s largest company.
The company missed a crucial deadline in 2021 due to its inability to make interest payments on approximately $1.2 billion in international loans.
After defaulting on debt repayments, Evergrande has been attempting to renegotiate its contracts with creditors.
The company filed for Chapter 15 bankruptcy protection in a New York court earlier this month.
Chapter 15 protects a foreign company’s U.S. assets while it restructures its debts.
As a result of Evergrande’s financial difficulties, several other developers have defaulted on their obligations and abandoned unfinished construction projects across the country.
