China Evergrande Resumes Trading, Unsurprisingly Craters Over 12.5%

21st October 2021
China Evergrande Resumes Trading, Unsurprisingly Craters Over 12.5%

China Evergrande [ ] has resumed trading following a three-week break, only to crater upon market opening.

Trading in the troubled real estate giant was halted by Hong Kong’s stock market operator on 4 October 2021.

The suspension followed the real estate giant’s failure to meet a second key bond interest payment.

Whilst Evergrande was offline from the stock market, news about the world’s most indebted property developer failed to inspire confidence among investors.

Although a senior official at the International Monetary Fund said risks stemming from the China Evergrande crisis are “contained” for now, and we largely agree, it doesn’t detract from the severity of Evergrande’s situation.

Hopson Development Holdings, which was linked to potentially acquire 50.1% of Evergrande’s holdings recently stated that it “regrets to announce that the vendor has failed to complete the sale” of the Evergrande Property Services stake.

Evergrande’s debt currently stands at USD 300 billion, with fears spreading into the wider China real estate market, which saw house prices drop for the first time in over six years.

As Evergrande resurfaced on Thursday, its share priced has cratered over 12.5% to HKD 2.60 (at the time of writing).

Its reemergence comes days before the end of a grace period on a dollar-bond coupon that Evergrande failed to pay in September. Optimism that Evergrande will pay the debt within the grace period continues to be tested.

Our stance at Bread has long been that Evergrande’s crisis will not unfold like the 2008 housing crash in the US. Moreover, we also believe Evergrande rivals Country Garden and Sunac won’t follow suit in collapsing.

Image credit: Bread News

Written by Bread News Team
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