China's Evergrande Shares Halted As Hong Kong Court Orders Liquidation Of World's Most Indebted Developer With Over $300B In Liabilities

The shares of China Evergrande EGRNQ were temporarily suspended after a Hong Kong court issued a liquidation order for the troubled real estate giant.

What Happened: The shares of China Evergrande, a major property developer in the country and the world’s most indebted developer with over $300 billion in liabilities, were halted after experiencing a 20% drop in early trading on Monday. This decision was made in the wake of a Hong Kong court’s ruling to liquidate the company, reported CNBC.

China Evergrande, once a leading property developer in the country, has been grappling with a severe debt crisis in recent years. The company’s overseas creditors failed to reach a last-minute agreement over the weekend, potentially leading to the imminent liquidation of the real estate developer.

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Evergrande, the world’s most indebted property developer, defaulted in 2021 and announced an offshore debt restructuring program in March last year. Chinese policymakers have been working to contain the debt crisis in the struggling property sector.

Why It Matters: The liquidation of Evergrande, a company with $240 billion in assets, is a significant blow to China’s financial markets. This decision comes at a time when China is grappling with a sluggish economy, a struggling property market, and a stock market near five-year lows. The ruling is likely to further undermine the efforts of policymakers to revive growth.

The recent events are part of a series of setbacks for China Evergrande. Earlier in January, the company’s electric vehicle (EV) unit, China Evergrande New Energy Vehicle Group Ltd EVGRF, experienced a significant 23% fall in share value following the arrest of its executive director, Liu Yongzhuo. This was due to suspicion of illegitimate activities.

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