Evergrande at the end: China's construction giant is delisted from the stock exchange!

Evergrande at the end: China's construction giant is delisted from the stock exchange!

Evergrande, once China's largest construction company, was delisted today. Loud tagesschau.de the group no longer meets the requirements of the Hong Kong trading center. Trading in Evergrande shares had been suspended since early 2024 after a Hong Kong court ordered the company to be broken up. The construction company is increasingly seen as a symbol of the serious problems in the Chinese real estate industry, which has been in a deep crisis since 2020.

The problems at Evergrande manifested themselves in an enormous debt burden of around 300 billion euros. Over 1,000 projects were still being planned or under construction, many of which remained unfinished. Evergrande had already fallen into insolvency in 2021, which marked the beginning of a lengthy restructuring process. The company's financial difficulties have also contributed to falling property prices in China, putting many construction groups in a similar situation.

Consequences of bankruptcy

The crisis in the construction sector is not only putting a strain on the company itself, but also on the entire Chinese economy, which has not recovered as expected after the corona pandemic. The real estate industry previously accounted for up to a third of China's economic power. Political and economic factors such as the trade dispute with the USA and weak domestic consumption are also putting pressure on growth. Many young people cannot find a job, which puts social stability into question.

In 2020, the Chinese government already began to curb debt growth in the real estate sector. Nevertheless, Evergrande was unable to service a dollar bond in December 2021, which led to a further escalation of the situation. An investor filed a lawsuit to liquidate Evergrande in June 2022. On January 29, 2024, a Hong Kong court finally issued a ruling ordering liquidation. A liquidator has been appointed to run the company and manage the assets.

Unclear future

Evergrande has liabilities of an estimated 2.4 trillion yuan (about $333 billion) and assets of about 1.7 trillion yuan. Most of the group's assets and liabilities are in mainland China, where it is unclear whether the Hong Kong ruling will be recognized. Chinese courts could appoint their own liquidators, which would significantly complicate the process.

Currently, Evergrande bonds are trading at just 1.5 percent of their face value, and the company's market value is just HK$2.2 billion. The real estate market in China has been in crisis since 2020, which is also reflected in the number of sales and prices. An estimated 1.5 million people have made deposits for unfinished homes at Evergrande. The government in Beijing could decide to provide more support to the market, while President Xi Jinping has declared the fight against real estate speculation as a goal. Despite the crisis, the policy on real estate regulation remains as is tagesanzeiger.ch reported.