Chinese real estate giant Evergrande collapses on the day of its IPO

The shares of the Chinese real estate giant evergrande They plummeted nearly 80% on the Hong Kong stock market on Monday, the first day they were back on the market after a 17-month suspension.

The resumption of operations came after the company announced on Friday that it had complied with the exchange’s requirements, including publishing its financial results and complying with other listing rules.

evergrandeOnce China’s largest real estate company, defaulted in 2021 and has more than $300 billion in liabilities, it has become a symbol of the Chinese real estate crisis that many fear could spread globally.

Its shares fell up to 87% during the day on the stock market, reducing its market value to less than US$ 600 million, when in 2017 it reached 50,000 million. The company ended the day with a fall of 79.4%

On Sunday evergrande reported new losses in the first half of the year of 33 billion yuan ($4.53 billion), an improvement from 66.4 billion yuan in losses in the same period last year.

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

China’s real estate marketcooled down significantly” in the first six months of the year due to several bankruptcies in the sector, “further exacerbating volatility in the marketEvergrande said.

The company also claimed to have “constantly promoted the work related to the restructuring of its debts abroad.”

Creditors meetings postponed

In March 2022, the Hong Kong Stock Exchange suspended trading in shares of evergrande after the real estate company did not publish its financial results for 2021.

Its earnings for 2021 and 2022 were published last month, with a net loss of more than $113 billion in that two-year period.

The company was at risk of being delisted if its shares were suspended for 18 months, according to Hong Kong stock exchange rules.

evergrande It was due to hold meetings with its creditors on Monday about a proposed foreign debt restructuring, but announced in the afternoon that they had been postponed.

According to the company, this postponement of approximately one month will allow creditors to “consider, understand and evaluate” his restructuring plan.

The meetings will take place between September 25 and 26, “online” with the schedule that creditors expected, according to Evergrande.

The plan of evergrande is to offer creditors the option to exchange their debt for new debt issued by the company and shares in two subsidiaries, Evergrande Property Services Group and Evergrande New Energy Vehicle Group.

Earlier this month, the company filed for bankruptcy in the United States, a move to safeguard its US assets during its restructuring.

China’s real estate sector is proving a stumbling block in the world’s second-largest economy’s attempt to pull itself out of the post-COVID-19 slump.