China's Evergrande shares plunge more than 80%

Evergrande shares plunge 87% as it resumes trading on Hong Kong's stock exchange after 17-month suspension

Evergrande, China’s second-largest real estate developer, has been suspended from trading on the Hong Kong Stock Exchange since March 2022 due to delays in releasing its financial statements. The company recently applied to resume trading as it has improved its internal controls and updated its procedures to comply with Hong Kong’s listing regulations.

Photo: RT.

According to DW, the company is undergoing a debt restructuring process that is expected to last a long time. On August 27, it announced a net loss of 39.3 billion yuan ($5.4 billion) in the first half of the year. The company currently has total assets of 1.74 trillion yuan, including 13.4 billion yuan in cash and cash equivalents. Previously, the company said it would lose 582 billion yuan ($80 billion) in 2021 and 2022.

Evergrande will hold a meeting with its creditors on August 28. The first-half results will give foreign bondholders a more comprehensive perspective when evaluating the company's restructuring plan.

In April, the Chinese developer said 77% of its A-bond investors had approved the plan, while only 30% of its C-bond holders had. The company needed at least 75% of each group to agree to one of China’s largest restructurings to date.

The loss also underscores Evergrande’s struggles amid China’s property crisis, which has dragged down the world’s second-largest economy for the past two years.

Evergrande, like other Chinese real estate companies, fell into crisis since mid-2021. The cause is believed to be Beijing's "three red lines" policy, launched to reduce systemic risk by limiting the ability of real estate companies to borrow new loans.

Evergrande suffered the heaviest losses, due to its excessive financial leverage to develop projects and diversify its business. Its total debt at the end of June was about 2.4 trillion yuan ($340 billion). This figure is equivalent to 2% of China's GDP.

Evergrande is the latest in a string of other Chinese real estate giants, including Kasia, Fantasia and Shimao Group, to default. Most recently, China's largest private real estate company, Country Garden, warned that it is "considering various debt settlement options."

Le Na (According to DW)

Source: https://www.congluan.vn/co-phieu-evergrande-cua-trung-quoc-tut-doc-hon-80-post262352.html