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Evergrande resurfaces on the Hong Kong stock market and shares rise 28%

Evergrande resurfaces on the Hong Kong stock market and shares rise 28%
October 3, 2023 – 10:33

The highly indebted Chinese real estate conglomerate resumed trading on the Hong Kong market this Tuesday.

The highly indebted Chinese real estate conglomerate, Evergranderesumed trading on the Hong Kong Stock Exchange this Tuesday, according to a statement posted on the financial market’s website.

Subsequently, The Chinese real estate giant saw a significant rebound in its shareswith an increase of 28%, after trading resumed in the Hong Kong market. The operation had been suspended the previous week when the company, already heavily in debtannounced that his boss was being investigated for alleged crimes.

In a volatile session, The securities of the real estate firm experienced considerable variations. They managed to climb a 60%then they fell at 10% and finally recovered reaching a increase of 28%.

Willer Chen, a research analyst at Forsyth Barr Asia Ltd., noted that “it appears that the gains are driven by hot money.” Howeveralso expressed concern about high volatility and uncertainty over whether investors will be able to make consistent profits with these securities.

Evergrande has taken on crucial symbolism amid China’s growing real estate crisis, with several real estate companies highly indebted, raising fears about the impact on the Chinese and global economy as a whole. The company announced that its founder and president, Xu Jiayin, was being investigated for alleged crimes after which they suspended trading in its shares.

This situation has exacerbated a major economic slowdown in the world’s second largest economy and has raised youth unemployment to historic levels. With massive debt and an inability to issue new debt due to investigations into its subsidiaries, Evergrande has posed considerable risk to the Chinese economy, where the real estate sector accounts for a quarter of GDP and has been a crucial pillar of growth for decades.

Source: Ambito

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