Evergrande suspends trading in Hong Kong shares

By Diksha Madhok, CNN Business

Chinese under siege Real estate developer Evergrande suspended operations in Hong Kong on Monday as the heavily indebted company faces an ongoing real estate crisis.

Evergrande said in a file on the Hong Kong Stock Exchange that the trading halt was pending an “announcement containing inside information,” although he did not elaborate.

The company has around $ 300 billion in total liabilities, and analysts have been wondering for months whether a collapse could trigger a broader crisis in the Chinese real estate market, hurting homeowners and the financial system as a whole. The US Federal Reserve warned last year that China’s real estate problems could hurt the global economy.

In December, Fitch Ratings said the company defaulted on its debt, a downgrade, the rating agency said, reflecting Evergrande’s inability to pay interest due that month on two dollar-denominated bonds.

The company’s shares were rocked last week after further debt payment deadlines passed with no sign that it had fulfilled its obligations, though it has a 30-day grace period to pay those debts. (Fitch’s downgrade came when Evergrande appeared to miss payments after their grace periods expired.)

Evergrande did not immediately respond to a request for comment on his decision to stop the actions on Monday.

As the company’s financial woes escalated, it received positive news last month saying it had made early progress in resuming construction. Company chairman Hui Ka Yan said no one in the company would be allowed to “lay flat” and pledged to deliver 39,000 units of properties in December.

This number was a huge jump from the less than 10,000 units delivered by the company in each of the previous three months.

And, there are signs that Chinese authorities are taking action to contain the fallout from the company’s downward spiral and guide it through a restructuring of its debt and business operations.

Evergrande announced in December that it would set up a risk management committee, including government officials, to focus on “mitigating and eliminating” future risks. Its members include senior officials from large state-owned enterprises in Guangdong, as well as an executive from a major central government bad debt manager.

The People’s Bank of China has also said it will inject $ 188 billion into the economy, apparently to counter the housing crisis, which accounts for nearly a third of China’s GDP.

– Laura He contributed to this report.

The-CNN-Wire
™ & © 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.


Source link

Comments are closed.