Hong Kong The shares of the ailing Chinese real estate company Evergrande were suspended from trading on the Hong Kong Stock Exchange on Monday. The exchange announced this without giving any further reasons. There was also no explanation from the ailing property developer. Evergrande has more than $ 300 billion in debt. The real estate developer’s share prices had slumped by almost 90 percent last year.
Evergrande missed out on new coupon payments worth $ 255 million due last Tuesday, but both payments have not passed their 30-day grace period. As early as October, trading in the papers of the largest Chinese construction company was interrupted due to unpaid bond interest.
On Friday, Evergrande rolled back investor repayments into its wealth management products, stating that anyone can expect a monthly principal payment of 8,000 yuan ($ 1,257) for three months, regardless of when they are due. The move illustrates the worsening liquidity bottleneck at the Chinese industry giant and increases the pressure on the government in Beijing to prevent a conflagration in the real estate sector.
Most recently, in addition to Fitch, Standard & Poor’s (S&P), the second international rating agency, downgraded Evergrande’s creditworthiness – to credit default in some areas and thus one step ahead of complete default. At the same time, other Chinese real estate companies also got into trouble, while the long booming market suffered a setback.
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More: Falling prices and fewer new buildings: China’s real estate market is under pressure