From US$50 billion to bust, investors count cost of Evergrande’s market tryst.
China Evergrande Group, for the most part, lived true to its name — it was once the country’s premier developer, its listing in Hong Kong in 2009 was the biggest by a Chinese private developer, and it had the largest pile of debt in the property sector globally.
That attribute stayed with the company till the very end of its boom-to-bust saga — its delisting from the Hong Kong stock exchange on Monday would be one of the largest by market value and volume in recent years.
The developer started with a strong public market debut and a stock value of US$9 billion in late 2009 that grew more than five-fold to US$51 billion eight years later only to plummet to earth in recent years; it is now worth a meagre US$282 million.
The company’s journey from stock exchange darling to a pariah in the financial markets is a cautionary tale of unbridled debt-fuelled expansion in the world’s second-largest economy.
Its shares fetched HK$31.39 apiece at its peak, and it was down to HK$0.163 when it exchanged hands for the last time 19 months ago.
Trading in shares in the world’s most indebted developer with more than US$300 billion in liabilities has been suspended since it was hit with a liquidation order on Jan 29, 2024, after it defaulted on debt and failed to finalize a restructuring plan. Evergrande is getting delisted from the Hong Kong Stock Exchange due to its failure to resume trading within 18 months, according to a filing on Aug 12.
The delisting will close a chapter in China’s unprecedented property crisis that started in 2021, though it’s unlikely to be the last to meet such a fate as the sector continues to be hobbled by a liquidity squeeze and a lack of demand.
Source: Theedgemalaysia
