China's Evergrande Group shares plummet over 80%

Beijing [China], August 28 (ANI): World's most indebted real state developer, Evergrande Group's shares plummeted 87 per cent on Monday after the lifting of a 17-month trading suspension, CNN reported.

In the first six months of 2023, Evergrande, in a Sunday filing to the Hong Kong stock exchange said that its loss attributable to shareholders amounted to 33 billion yuan (USD 4.5 billion), which is 50 per cent of the 66.4 billion yuan loss (USD 9.1 billion) recorded in the same period a year ago.

Revenue surged 44 per cent from a year ago, reaching 128.2 billion yuan (USD 17.6 billion).

The company said it had "actively planned for the resumption of sales and successfully seized the short boom of the property market that emerged at the beginning of the year."

For years, the Shenzhen-based company was one of China's largest property developers by sales. But it had borrowed heavily to fund its expansion and defaulted on its debt in 2021, sparking a crisis in China's real state sector, which accounts for as much as 30 per cent of the country's economy. Earlier this month, it applied for bankruptcy in the United States, reported CNN.

Earlier this month, Evergrande filed for Chapter 15 bankruptcy, which is a way for foreign companies to use US bankruptcy law to restructure debt.

The downfall of Evergrande started in 2021, when the central government moved to curb excessive borrowing to try to slow the rise in home prices, effectively cutting off a major source of funding for property developers, as per CNN.

Evergrande, which had 300 billion USD in liabilities, couldn't shore up cash fast enough to make its debt payments.

It defaulted in December 2021, triggering a market panic. A wave of defaults followed, and China's vast real estate market has yet to recover. The building was suspended on dozens of projects, leaving many "pre-sale" buyers with no new home and a hefty debt burden, according to CNN.

The steps that will be taken by Beijing to restructure billions of dollars in offshore debts have massive implications for China's financial system, according to CNN. (ANI)