Evergrande

Evergrande in liquidation, the real estate collapse continues in China

Shares in China giant Evergrande were suspended after plunging more than 20% in early trading on Monday following news that a Hong Kong court has decided to liquidate the long-troubled property developer.
The Asian session was volatile, with stocks rising at the start of trading, driven mainly by positive expectations on Beijing's new measures to stabilize the local market and inject liquidity, but then falling.
The closing of the main Chinese indices was below parity.
Investors find themselves in a very complex context.
China's real estate woes, in fact, add to the geopolitical risks that have pushed up oil prices, after a Houthi missile attack caused a fire on a fuel tanker in the Red Sea and a drone attack killed three US soldiers in Jordan.
Not only that, anticipation is growing for this week's Fed meeting.
The decision on rates will be revealed on January 31st, probably still unchanged, and Powell at the press conference could offer more precise clues as to when the decrease in the cost of money will begin.
Evergrande in liquidation, what does it mean? China sinks into real estate crisis China Evergrande Group has received a liquidation order from a Hong Kong court, kicking off what is already considered a complex and emblematic process of a real estate debt crisis that has been sinking China for years.
A liquidation will lead to the company being run by provisional liquidators and facing several sensitive issues, including control by founder and chairman Hui Ka Yan, Judge Linda Chan told the city's High Court on Monday morning.
The ruling highlights more clearly how the real estate giant – with 2.39 trillion yuan (333 billion dollars) of liabilities – is the symbol of a crucial crisis, which has led to a slowdown in economic growth and a series of defaults in China.
Evergrande, which for a time in the last decade was the country's largest builder in terms of sales, defaulted on a dollar bond for the first time in December 2021.
From here a wave was unleashed shock through Chinese markets with investors fearing contagion.
Beijing has sought to curb the housing crisis, taking steps to boost home sales and provide liquidity to debt-laden developers.
Country Garden Holdings Co., a former flagship builder, is now the focus of investors' attention following its October default.
The market will pay close attention to what liquidators can do after being appointed, particularly whether they can gain recognition from one of three Chinese courts designated under a 2021 agreement between China and Hong Kong, the expert warned Lance Jiang, Ashurst Restructuring Legal Partner.
“The liquidators will have very limited enforcement powers over onshore assets in mainland China if they fail to obtain such recognition.” Chinese politicians are working to stem the debt crisis in the real estate sector.
Last week, the People's Bank of China and the Ministry of Finance announced measures to help increase liquidity available to real estate developers.
The measures, which will be valid until the end of this year, will help ease the persistent liquidity crisis for Chinese developers, after Beijing cracked down on the sector to address debt levels that had built up in the sector.

Author: A.W.M.

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