China Evergrande Group, the world’s most indebted property developer, faced a massive decline in its stock value on Monday as trading resumed on the Hong Kong Stock Exchange after a 17-month pause. The developer’s shares plummeted by approximately 87% in the first part of the day, causing its market value to drop to around $586 million, a significant decrease from its peak of over $50 billion in 2017. Although the shares slightly corrected during the afternoon session, they were still down by 79%.
Evergrande’s stock had been suspended since March 21, 2022, but the company applied for a trading resumption earlier this month to avoid delisting, which would have occurred if the suspension had reached the 18-month mark. The company stated on Friday that it had met the necessary requirements issued by the Hong Kong Stock Exchange to resume trading. An external auditor reviewed Evergrande’s independent investigation report and confirmed that no significant off-balance sheet transactions, assets, and liabilities were found.
Once China’s top-selling developer, Evergrande faced a liquidity crunch in late 2021, leading to a default on its debt. Since then, the company has struggled to complete projects and repay suppliers and lenders. In a report last month, Evergrande posted a combined loss of $81 billion over the past two years due to property write-downs, the return of land, losses on financial assets, and financing costs.
Despite its financial challenges, Evergrande reported a narrower net loss for the first half of this year due to a rise in revenue. The company’s loss for January-June was $4.5 billion, compared to a $9.1 billion loss in the same period last year. Additionally, its debt slightly decreased to around $328 billion from $335 billion at the end of 2022.
Earlier this month, Evergrande filed for bankruptcy protection under Chapter 15 of the US bankruptcy code as part of its efforts to restructure its mounting debt. The company is currently awaiting approval from creditors and courts to implement its restructuring plan, which was initially announced in March.
The situation surrounding Evergrande’s financial difficulties is closely monitored due to its potential impact on China’s economy and the global real estate market. Despite the challenges it faces, the company remains determined to navigate through this crisis and regain stability. For more news on the economy and finance, visit RT’s business section.