Chinese developer Evergrande plunges after resuming Hong Kong trading

Shares in embattled Chinese real estate giant Evergrande plunged more than 80% in Hong Kong on Monday morning after lifting a 17-month trading suspension.

It resumed trading after the company said in a filing on Friday that it had complied with guidelines set by the exchange, including belatedly announcing its financial results and complying with other listing rules.

Evergrande, once China’s largest real estate company, defaulted in 2021, saddled with more than $300 billion in debt, and became a symbol of a national housing crisis that many fear could spread globally.

Its shares plunged 86.67% at the open.

The company reported on Sunday a new loss of 33 billion yuan ($4.53 billion) in the first half of the year, an improvement from a loss of 66.4 billion yuan in the same period last year.

But its cash assets fell to $556 million from $2 billion last year, reflecting its dwindling liquidity.

Evergrande said China’s property market had “cooled significantly” in the first six months of the year, and new defaults had “further exacerbated market volatility”.
The company added: “Based on the principles of respecting international restructuring practices and treating the rights and claims of all creditors fairly and equitably, the company is steadily advancing work related to overseas debt restructuring.”

Evergrande’s creditors will vote on Monday on the developer’s proposal for its offshore debt, in what would be one of China’s largest ever restructurings.

The plan offers creditors the option to convert the debt into new notes issued by the company and stakes in two subsidiaries, Evergrande Property Services Group and Evergrande New Energy Automobile Group.

Earlier this month, the company filed for bankruptcy protection in the United States, a measure to protect its U.S. assets during a restructuring.

The company has also dismissed a winding-up application in a Hong Kong court, with a hearing in one of the cases postponed until October.

In March 2022, because Evergrande failed to announce its financial results for 2021, the Hong Kong Stock Exchange suspended trading in the company’s shares.

Results for 2021 and 2022, announced last month, showed a net loss of more than $113 billion over the two-year period.

China’s real estate sector has proven to be a stumbling block for the world’s second-largest economy as it tries to emerge from the post-coronavirus recession.

Chinese property developer Country Garden is now at risk of defaulting on its bond payments next month, saying there are “significant uncertainties in the redemption of corporate bonds”.

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