Market shutdown for Evergrande, China's crisis manufacturer

Financial institutions worldwide are halting operations due to Evergrande, the Chinese corporate giant grappling with a multitude of financial crises. - Tumbling Stock Market Signals Evergrande's Struggles in China's Economic Landscape

Evergrande, China's largest real estate developer and once a significant contributor to the country's economy, has been delisted from the Hong Kong Stock Exchange. The delisting occurred at the start of trading on a day when the company failed to meet a deadline set by the exchange to resume trading in its shares.

The delisting marks the end of Evergrande's run after around 15 years, during which it managed about 1,300 construction projects in 280 Chinese cities. At its peak, the company was the largest real estate developer in South China and owned the Guangzhou FC football team for several years.

Evergrande's faltering began in 2020 due to new credit rules introduced by the central government in Beijing making it harder for real estate developers to borrow. This struggle to meet obligations to creditors has led to Evergrande's inability to complete already-paid-for but not yet built apartments.

The company's debt pile stands at around $300 billion, when converted to euros at current exchange rates, this equates to approximately €256 billion. This massive debt has made Evergrande a symbol of China's real estate crisis, which has been affecting the nation's economy since 2021.

The court ruling in favor of foreign creditors seeking to dismantle Evergrande took place in Hong Kong, leading to the suspension of trading in Evergrande's shares since January 29, 2024. The stock exchange regulatory authority in Hong Kong has imposed a lifelong trading ban on Hui Ka Yan, chairman of Evergrande, prohibiting him from trading his shares in China.

Hui Ka Yan, who briefly became China's richest man, was also banned from trading stocks in China for life by the stock exchange regulator in March 2024. Evergrande had a glittering stock market debut in 2009 and multiplied its market value thereafter. However, the company's rapid growth and success were not sustainable, leading to its current predicament.

The delisting of Evergrande from the stock exchange and the lifelong trading ban on its chairman are significant developments in China's real estate sector. The impact of these events on the Chinese economy and the broader global financial markets remains to be seen.