Real estate company: Hong Kong stock exchange deeply in the red due to Evergrande worries

The worsening crisis of the Chinese real estate company Evergrande led to heavy losses on the Hong Kong stock exchange on Monday. After the ongoing downward slide in the past few days and weeks, Evergrande shares collapsed by another 14 percent after the start of trading.

Other Chinese real estate and financial stocks were also deeply in the red as there were fears that the crisis could spread to other companies. The Hong Kong leading index lost almost four percent by noon. The markets in mainland China remained closed on Monday and Tuesday due to public holidays.

Evergrande has accumulated debts of the equivalent of more than 300 billion US dollars (256 billion euros). Experts see a payment default as becoming more and more likely. Multiple interest payments are due this week.

Over the weekend, the ailing Chinese real estate giant offered investors to compensate them with real estate. The offer is therefore aimed at buyers of the company’s asset management products. Evergrande also admitted misconduct by several high-ranking managers. Six executives illegally redeemed several of the company’s investment products in advance. The company announced on Saturday that the matter is being taken very seriously.

Most recently, rating agencies downgraded Evergrande’s credit rating several times. Since the beginning of the year, the Group’s share price has fallen by over 80 percent. “An insolvency of some kind seems likely,” said the Fitch agency and downgraded Evergrande’s creditworthiness. “We believe that the credit risk is high,” said the agency on tight liquidity, declining sales, postponed payments to suppliers and construction companies.