Digital Zeitgeist – Evergrande Shares Continue to Decline on Worries About the Chinese Economy
The property developer’s worth decreased by more than $2 billion when stock trading restarted after a 17-month pause. After losing more than $2 billion in market value when it resumed trading for the first time in over 18 months on Monday, Evergrande shares plummeted another 14% on Tuesday.
Evergrande, the most indebted real estate company in the world with liabilities of $328 billion (£260 billion), has seen a more than 99% decline in share market value over the last three years. After a 17-month ban, which Evergrande used to attempt to restructure its offshore debt, the business started trading again on the Hong Kong stock market on Monday.
However, investors promptly erased more than 45% of the company’s market value when it disclosed a combined loss of $81 billion for 2021 and 2022 last month.
The corporation, which is in the midst of a real estate crisis as concerns about the overall health of the second-largest economy in the world increase, posted a 33 billion yuan ($4.5 billion) loss for the first half of the year on Sunday.
Meetings with overseas creditors that were supposed to result in a vote on a restructuring plan this week have been postponed for another month by Evergrande, which is dealing with more than 2,000 lawsuits totalling nearly 535 billion yuan. A proposal to reimburse investors with notes related to the firm’s listed Hong Kong subsidiaries, which include an electric car company and a property management company, was presented by the company earlier this year. The plan defaulted in 2021.
Evergrande filed for chapter 15 bankruptcy protection in New York earlier this month to safeguard its US assets while the business seeks to restructure its debts.
China’s broader economy is under growing strain as the world’s largest real estate market is in chaos due to developers like Evergrande failing to finish projects, leaving suppliers underpaid and customers out of pocket.
Since China has the largest real estate market in the world, there are concerns that financial problems there may extend to other areas of the economy. With young unemployment at a record level and sluggish retail sales, the nation’s post-Covid economic recovery has stalled in several areas. Deflation has returned to the economy after a two-year absence.
A 30-day grace period was triggered earlier this month when Country Garden, previously China’s biggest private developer by sales, failed to make payments on its overseas obligations. On a 3.9 billion yuan bond, the business requested a 40-day extension from creditors on Tuesday. The board of directors of Country Garden, which has liabilities of approximately $200 billion, will meet on August 31st, 2023, to decide on extending the payment deadline to September 4th, 2023. Early in the month, the corporation skipped $22.5 million in interest payments on two foreign notes worth $500 million.
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