A Hong Kong court on Monday ordered the liquidation of China Evergrande Group, a move likely to send ripples through China's collapsed financial markets as policymakers scramble to contain the deepening crisis. .
Stock trading in China Evergrande, China Evergrande New Energy Vehicle Group, and Evergrande Real Estate Services has been suspended. The benchmark Hang Seng Index rose 1.2%.
“I think the bigger surprise here is that the clearing of Evergrande has taken so long,” said Matt Simpson, senior market analyst at City Index in Brisbane. “It should be captured, but I don't think it will increase credibility.” This news alone will have an impact on the real estate sector. ”
Ken Chan, Principal Asia Currency Strategist at Hong Kong Mewho, said: “As the market remains focused on the downturn in China's real estate sector, we will assess whether this liquidation or event will impact the progress of Hong Kong's real estate sector. I think so,” he said. Will China's real estate sector be fixed, and what kind of deal will the Chinese government make in the aftermath of this type of court case? ”
“This could further affect the confidence of mainland creditors and increase the difficulty of Evergrande's restructuring in mainland China. At the same time, mainland real estate “This could also affect investor confidence in the market.” “Industry and mainland residents will be less willing to buy real estate. This could have a negative impact on the economy and capital markets.”
“Whether offshore creditors can apply for the sale of Evergrande’s assets in mainland China will depend on whether mainland courts grant or enforce the liquidation order from Hong Kong. If approved or enforced, offshore creditors will You will have the opportunity to claim your assets in mainland China.''Otherwise, you can only apply for liquidation of your Hong Kong assets. ”
Evergrande defaulted on its offshore debt in late 2021, becoming a symbol of the debt crisis engulfing China's real estate sector. The world's most indebted developer has about $300 billion in debt and his $240 billion in assets. The liquidation application was first filed in June 2022 by Topshine, an investor in Evergrande division Fangchabao, which claimed that the developer had defaulted on an agreement to repurchase the shares it had purchased in its subsidiary. Evergrande had been working on a $23 billion debt repayment plan for two years. *Original plans were scrapped in late September when billionaire founder Hui Kar Yang announced he was being investigated for criminal charges. A special bondholder group sided with the developer against the liquidation application until the final public hearing in early December.
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