A Hong Kong court has ordered the liquidation of Evergrande, China’s foremost real estate developer.
Consequently, the company’s stock has plummeted by another 20%, prompting a halt in trading.
Evergrande now holds the dubious distinction of being the world’s most indebted property developer.
This development unfolds against the backdrop of an 85% decline in China’s HY Real Estate Index over the past two years.
China is contemplating substantial economic stimulus measures, including discussions about a potential ban on short selling.
Home prices in China‘s 70 largest cities have experienced a continuous decline for 19 consecutive months.
Trading for China’s Evergrande, Evergrande Services, and Evergrande Vehicle has all been halted.
Other Hong Kong-listed Chinese property developers witnessed gains being erased following the court’s wind-up order for Evergrande.
Mainland China and Hong Kong SAR have jointly declared mutual recognition and enforcement of judgments in civil and commercial matters.
This means that Evergrande’s wind-up order issued by the Hong Kong court is effective in mainland China.
Everbright Securities International: The liquidation of Evergrande, as ordered for by court, has the potential to erode confidence among mainland creditors. It could also have repercussions on investors’ trust in China’s real estate sector, potentially reducing their inclination to sell properties. This, in turn, might result in broader economic and capital market impacts.
