key facts to know : NPR
Residents are going through a partially closed Evergrande sales complex in Beijing on Monday, January 29, 2024.
Ng han guan / ap
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Ng han guan / ap
Residents are going through a partially closed Evergrande sales complex in Beijing on Monday, January 29, 2024.
Ng han guan / ap
China Evergrande’s shares were withdrawn from the Hong Kong Stock Exchange on Monday, marking another stage in the retirement of the giant real estate promoter whose fall contributed to an extended crisis on the Chinese real estate market.
Evergrande creditors still work at the end of the debts which amounted to more than $ 340 billion. Once the second Chinese developer, he was in trouble when Chinese regulators repressed several years ago on what they deemed to be a borrowed surplus by the developers.
This has caused dozens of real estate companies to be lacking on their debts, triggering a slowdown in the real estate market which still leads to the second world economy.
Here’s what you need to know about Evergrande:
The delimitation of a single leader in the Chinese real estate market
The exchange of Hong Kong said on Monday that Evergrande’s actions were struck off on Monday morning, as planned. The shares were negotiated for the last time on January 29, 2024, then suspended after a Hong Kong court ordered the liquidation of the company when it did not provide a viable debt restructuring plan.
The stock market rules stipulate that the list of actions of a company can be canceled if the trade in its securities is suspended for 18 consecutive months.
Evergrande’s role in the Chinese real estate crisis
After years of warning that led the world rating agencies to reduce the Chinese government’s credit note in 2017, the Communist Party in power repressed the real estate debt in 2020. He imposed controls called “three red lines” which prohibited developers strongly indebted like Evergrande to borrow more to reimburse the bonds and bank loans as they were on the scale.
The fears of a possible floor defect in 2021 rocked the world markets, but they detained after the Chinese central bank said that its problems were contained and that Beijing would maintain the credit markets. Evergrande was one of the largest of the many developers who have not reimbursed their creditors.
Chinese house buyers often pay in advance for apartments before they even be built. The Credit Crunch for Evergrande and other developers led them to suspend the construction, leaving many projects in the limbo. The slowdown in purchases of houses and construction have undertaken the economy, reaching the demand for building materials, household appliances and even vehicles at a time when China was also pretended with the disturbances caused by the Pandemic COVID-19.
Since most Chinese families have their property -related wealth, the anemic housing market has been a major factor in terms of consumer spending.
The slowdown in property is weighing
There has been a certain resumption in the housing sector, but the prices of houses and investments continued to drop.
Before the repression of the loan, real estate represented some 20% of the Chinese economy. When steel and copper expenses for construction, furniture and other related purchases have been added, estimates from the economy reached approximately a third.
Chinese leaders have sought to bring developers to complete projects and deliver apartments that have already been paid, providing billions of loans and grants. They encouraged local governments to buy excess apartments to serve affordable accommodation and deposit requirements and relaxed mortgage.
They also raised numerous restrictions on house purchases for investment purposes in major cities, a decision that analysts of research on global HSBC in investment described as “surprising” as they came earlier than expected.
Sales and prices of houses should fall more in August, they said in a recent report.
“We believe that this is a positive change showing the increased proactivity of the government in the deployment of measures, which will help strengthen market confidence and respond to the concern of revival too late,” he said.
Evergrande status
Evergrande, whose headquarters are in the south of Shenzhen, in southern China, near Hong Kong, was founded by the entrepreneur Hui Ka Yan, also known as Xu Jiayin, in 1996. His ascent and his decline reflected the boom and the bust on the China real estate market after the housing reforms.
The actions of the company were listed in Hong Kong in 2009.
Evergrande filed a request for protection against the bankruptcy of Chapter 15 in New York in 2023, but this case was then withdrawn. Although a Hong Kong court has ordered a liquidation of the company’s debts, more than 90% of its assets are on the Chinese continent, which makes it difficult to reimburse its creditors.
Its liquidators declared in a recent stage report that they had received from debt complaints totaling $ 45 billion on July 31, much higher than the $ 27.5 billion in liabilities revealed in December 2022 and that the new figure was not final. They also took control of more than 100 companies within the group with collective assets worth $ 3.5 billion on January 29, 2024.
Until now, around $ 255 million in assets have been sold, said liquidators, calling for “modest” realization.
