Evergrande: Chinese Developer’s Shares plunge by 80%

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First day of trading in Hong Kong for almost a year and a half saw almost an 80% decline in shares of the troubled Chinese real estate developer Evergrande.

As a result of Beijing’s crackdown on real estate companies, the shares have lost more than 99% of their value over the past three years.

The second-largest economy in the world is threatened by the real estate market crisis that has Evergrande at its center.

The company reported a 33 billion yuan ($4.5 billion; £3.6 billion) loss for the first half of the year on Sunday.

That was better than the loss of 66.4 billion yuan it posted for the same period last year, though.

Directors of the firm “have taken a number of measures to improve the liquidity position and financial position of the group,” Evergrande stated in a filing to the Hong Kong Stock Exchange.

The company also stated that its revenue for the first half of this year increased by 44% to 128.2 billion yuan over the same period last year. But during that time, its cash reserve shrank by 6.3%.

Trading in Evergrande’s shares has been halted since March of last year.

Concerns regarding the post-pandemic recovery of the second-largest economy in the world have increased as a result of issues in China’s real estate market.

Additionally on Monday, China reduced its 0.1% stock trading fee by half in an effort to “enliven the capital market and raise investor confidence.”

Following the news, the key stock indices in Hong Kong and mainland China increased.

The action was taken a few days after the nation’s central bank, in response to poor consumer spending and declining exports, lowered one of its major interest rates for the second time in three months.

Evergrande disclosed this month that it lost a total of 581.9 billion yuan in 2021 and 2022.

One of China’s largest real estate developers, Country Garden, issued a warning earlier this month that the first half of the year might result in a loss of up to $7.6 billion (£6 billion).

The company’s rating was reduced by rating agency Moody’s due to “heightened liquidity and refinancing risks”.

When new regulations to limit the amount of money large real estate corporations might borrow were announced in 2020, the Chinese real estate market was rocked.

Evergrande, previously the top-selling developer in China, had amassed debts of more than $300 billion as it aggressively expanded to become one of the greatest businesses in the nation.

In 2021, the company missed a deadline because it didn’t pay the interest on almost $1.2 billion in overseas debts.

After falling behind on debt repayment, Evergrande has been trying to renegotiate its contracts with its creditors.

The business filed for Chapter 15 bankruptcy protection at a court in New York earlier this month.

A foreign firm can protect its US assets under Chapter 15 while it seeks to restructure its debts.

Due to Evergrande’s financial issues, a number of other developers have fallen behind on payments and abandoned incomplete construction projects all around the nation.

Chinese property developer Evergrande posts $81 billion in July

In its long overdue earnings report that was released late on Monday, the China Evergrande Group reported a combined loss of $81 billion.

After struggling to complete projects and pay back suppliers and lenders, the most indebted property developer in the world went into default in 2021 and announced an offshore debt restructuring scheme in March.

Due to writedowns of properties, the return of lands, losses on financial assets, and financing costs, Evergrande’s net losses for 2021 and 2022 were 476 billion yuan ($66.36 billion) and 105.9 billion yuan ($14.76 billion), respectively.

Evergrande reported a net profit of 8.1 billion yuan in its final year of regular business, 2020.

Since defaults and abandoned real estate projects have been witnessed all throughout China as a result of Evergrande’s enormous debt load, the country’s vital real estate market has come under serious threat. The High Court is scheduled to consider the company’s proposed restructure on July 24.

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