Evergrande continues to plummet on Hong Kong stock exchange
AFTER the collapse of the partial sale of its services division, shares in the heavily indebted Chinese real estate group Evergrande continued to plummet on Thursday.
On the Hong Kong stock exchange the company’s shares lost almost 12 percent of their value by the close of trading. Since the beginning of the year, the loss has already amounted to more than 80 percent.
A majority sale of the property management business could have brought in billions in the short term and given the real estate giant some breathing space.
On Wednesday, however, Evergrande announced that the sale to the real estate group Hopson had fallen through. Hopson’s shares, like Evergrande’s, had been suspended from trading on October 4. Trading resumed on Thursday.
Evergrande is considered the world’s most indebted real estate company. It urgently needs to raise money to pay banks, suppliers and bondholders on time.
The group is so big that some experts fear a “contagion risk” for China’s economy and beyond.
The situation could come to a head this weekend when the 30-day grace period expires on interest payments on an offshore bond that Evergrande should have settled on September 23. Should Evergrande not be able to raise the payment totalling 83.5 million dollars, a formal default is imminent.
On Wednesday, Evergrande said that the partial sale of its services unit has fallen through, a move that otherwise would have provided the company with billions in muchneeded cash.
The sale of a majority stake in property management company Evergrande Property Services to Hooplife Technology Group, a subsidiary of Hopson Development, was halted.
The company said that based on information from different sources, it had reason to believe that the buyer had not met the requirement to make a general offer for Evergrande Property Services shares, Evergrande’s notice to the stock exchange said.