Evergrande shares suspended as stock plunges 20%
Evergrande shares have been halted after its stock plunged 20% this morning. It follows a court in Hong Kong ordering the liquidation of the Chinese property group for failing to offer a concrete restructuring plan
Court documents show the company has asked for a further three months to produce a new restructuring plan. When the company defaulted two years ago, it sent shockwaves through global financial markets – and has left many home buyers waiting for their new properties. It is the most indebted developer, with more than $300 billion of total liabilities. The impact of the latest court order could once again disrupt financial markets as the property sector accounts for as much as about a quarter of China's GDP, as IGTV’s Angela Barnes explains.
(AI Video Summary)
Evergrande's liquidation
Evergrande, a Chinese property group, is facing a major crisis as its shares plunged by 20% after a Hong Kong court ordered its liquidation. With over $300 billion in liabilities, Evergrande is already the most indebted developer in the world. This situation is reminiscent of a default the company faced two years ago, which had a negative impact on global financial markets and left many homebuyers without their properties.
Evergrande's US bankruptcy
To protect its American assets, Evergrande filed for bankruptcy in the United States last year. While the company has been working on a new repayment plan, it has requested an additional three months to come up with a fresh restructuring strategy. This recent ruling by the Hong Kong court is expected to unsettle Chinese financial markets, especially because the property sector makes up a quarter of the country's gross domestic product (GDP). This adds to the existing concerns surrounding a sell-off in the stock market.
China's property sector
The challenges faced by Evergrande and the potential consequences of its current situation highlight the difficulties being experienced by China's property sector. The industry has been under increased regulatory scrutiny to curb excessive borrowing and speculative behavior. These regulations, combined with a broader market sell-off, have had a significant impact on Chinese developers, making it harder for them to repay debts and raising concerns about potential contagion effects on the financial system.
The crisis surrounding Evergrande also brings concerns for homebuyers who have invested in the company's properties. Many individuals are still waiting for the completion of their new homes, and this situation raises questions about potential delays and financial losses. This poses a significant test for the Chinese government, as their ability to manage systemic risks and prevent social unrest resulting from damaged consumer confidence in the property market will be put to the test.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize your opportunity
Deal on the world’s stock indices today.
- Trade on rising or falling markets
- Get one-point spreads on the FTSE 100
- Unrivalled 24-hour pricing
See opportunity on an index?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on an index?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from one point on the FTSE 100
- Trade more 24-hour indices than any other provider
- Analyse and deal seamlessly on smart, fast charts
See opportunity on an index?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
