The Chinese real estate giant is more than $ 300 billion in debt. Rating agencies warn of insolvency. Evergrande urgently needs to raise money.
Trading in shares of the hard-hit Chinese real estate giant Evergrande and its property management company on the Hong Kong Stock Exchange has been suspended.
The Hong Kong Stock Exchange did not give a reason in its announcement on Monday. It is the first time in the company’s more than $ 300 billion indebted company that its shares have been suspended from trading in its recent liquidity crisis.
As the Chinese online news service Cailian reported with reference to informed circles, the Chinese real estate company Hopson wants to take over a 51 percent majority in the property management arm Evergrande Property Services, whose total value is more than 40 billion Hong Kong dollars (the equivalent of 4.4 billion Euros). The Cailian service belongs to the state-run Chinese newspaper “Securities Times”.
Hopson’s shares were suspended from trading on Monday, similar to those of Evergrande Group (EVG) and Evergrande Property Services. Against the background of financial difficulties, the shares of the Evergrande Group have already fallen by around 80 percent this year.
Evergrande is considered the world’s most heavily indebted real estate company. The corporation has to raise money to pay banks, suppliers and bondholders on time. In addition, Evergrande owes retail investors, including many employees, billions of dollars. The company is so large that some experts fear a “risk of contagion” for the Chinese economy and beyond.
Just last week, Evergrande sold a stake in a bank for ten billion yuan (1.3 billion euros) to get some air. According to press reports, the leadership in Beijing is said to have asked local governments to prepare for the economic and social consequences of a possible bankruptcy of the group.
According to the Wall Street Journal, around 1.4 million buyers across the country are waiting for Evergrande apartments to be built or completed. The Chinese government is hesitant to come to the aid of the real estate giant. She actually wants to bring order to the highly speculative and booming real estate market in China and could want to set an example with Evergrande.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
