China real estate developer crisis: Hong Kong suspends Evergrande from Stock Exchange

In a major setback to already debt-ridden Chinese real estate developer, Evergrande Group and all its subsidiaries were suspended from trading in its shares on the Hong Kong stock exchange from October 4, Monday. According to a statement released by the Hong Kong stock exchange, the world's largest bourse in terms of market capitalization has only informed about the suspension of Evergrande Group from its stock exchange and did not specify the reason for its action.

"The China Evergrande Group trading will be suspended starting at 9 am (local time) on Monday. Trading of structured products related to the firm will also stop," read the statement released by the Hong Kong stock exchange.

It is worth mentioning that China's second-largest property developer has been reeling under debt since the Communist government tightened limits on corporate debt levels. According to local media reports, the real-state developer organisation owes a total of $368 billion in loans to banks, along with liabilities to constructors and suppliers. Apart from Beijing's clampdown on big corporates, the report also highlighted declining sales and high-risk business model brought the company into crisis.

Notably, the Evergrande Group has been trying its best to revive the company by selling its shares. Earlier in September, it had announced to sell its shares in the Shengjing Bank for around USD 1.5 billion. Before selling shares to Shengjing Bank, it owed USD 304 billion in June.

Angry investors demand written assurance for investments

According to a report by Global Times, its shares fell by 82% since the beginning of this year. It is estimated that over 1.4 million Evergrande units all over Beijing are now doubtful whether the holdings they paid for will ever be developed. As soon as the reports of suspension from trading in Hong Kong aired by media outlets, hundreds of anxious investors picketed Evergrande's office in the southern city of Shenzhen.

The angry investors read slogans against the company and demanded a written assurance for their investments that now look nearly worthless. Meanwhile, another developer, Hopson Development Holdings, which had earlier announced to acquire a majority of share in Evergrande Property Services Group, was also suspended in Hong Kong from trading on Monday.

With inputs from AP/ANI

Image: AP