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28 Aug, 2023 09:22

Shares of world’s largest property developer collapse

China Evergrande lost nearly 90% of its market value early on Monday
Shares of world’s largest property developer collapse

China Evergrande Group, the world’s most indebted property developer, saw its shares nosedive on Monday as the company resumed trading on the Hong Kong Stock Exchange after a 17-month pause.

According to data, the developer’s stock plummeted roughly 87% in the first part of the day. Evergrande’s market value slumped by more than $2 billion compared to when it last traded, dropping to around $586 million and way off its peak of over $50 billion in 2017. Shares corrected slightly at the start of Monday’s afternoon session, but were still down 79%.

Evergrande stock had been suspended since March 21, 2022, but the company applied for a trading resumption earlier this month as it would have faced delisting if the suspension had reached 18 months.

The developer said on Friday that it had “adequately” fulfilled the necessary steps issued by the Hong Kong Stock Exchange to resume trading. An external auditor reviewed the company’s independent investigation report and confirmed it had not found notable off-balance sheet transactions, assets, and liabilities, Evergrande said in a filing.

Once China’s top-selling developer, Evergrande defaulted on its debt in late 2021 after facing a liquidity crunch. It has since struggled to complete projects and repay suppliers and lenders. In a report last month, the group posted a combined loss of $81 billion over the past two years as a result of property write-downs, the return of land, losses on financial assets, and financing costs.

However, on Sunday, Evergrande reported a narrower net loss for the first half of the year due to a rise in revenue. Its January-June loss was $4.5 billion against a $9.1 billion loss in the same period last year. Its debt also slightly dropped, reaching around $328 billion compared to $335 billion as of the end of 2022.

Earlier this month, the company filed for bankruptcy protection under Chapter 15 of the US bankruptcy code in an effort to restructure its mounting debt. The developer is now awaiting approval from creditors and courts to implement its restructuring plan, first announced in March.

For more stories on economy & finance visit RT's business section

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