China Evergrande to be Delisted from Stock Exchange, Marking End of Property Boom

 

The once-mighty China Evergrande Group, which was formerly the country’s largest property developer, is set to be delisted from the Hong Kong Stock Exchange, a move that marks the symbolic end of China’s 'golden era' of real estate. 

 

The collapse leaves a trail of staggering debt and countless unfinished homes.

 

Reuters reported that the group is now entering a "moment of collapse." After its spectacular listing in 2009, which was one of the largest private fundraisers in Chinese history at the time, Evergrande will now be formally removed from the exchange.

 

The developer's journey was one of dramatic rise and fall. Its share value was $9 billion in 2009, soaring to $51 billion eight years later. However, in recent years, it has plummeted to just $282 million. 

 

This cautionary tale of over-leveraged expansion in the world's second-largest economy is a stark warning.

 

Evergrande's shares reached a peak of HK$31.39 before falling to just HK$0.163 when trading was last suspended 19 months ago, on 29 January 2024. 

 

The world's most indebted developer, with a debt load exceeding $300 billion, was suspended from trading after defaulting and failing to reach a restructuring plan.
 

 

According to documents filed on 12 August, Evergrande is being delisted for failing to resume trading within the required 18-month period. 

 

This action is seen as the final act in China's unprecedented property crisis, which began in 2021. 

 

Earlier this month, state-backed developer China South City became the first of its kind to be ordered into liquidation by a Hong Kong court, following a number of private companies that met the same fate.

 

"Evergrande is one of the iconic examples of the collapse of China’s real estate sector in the past few years," said Gary Ng, a senior economist at the investment bank Natixis. 

 

While the delisting is mostly symbolic, he noted that "it still marks the end of the golden era of China’s real estate sector."

 

In recent years, Chinese authorities have worked hard to revitalise the sector, which once accounted for a quarter of the country’s GDP. 

 

Meanwhile, many homebuyers continue to wait for their unfinished homes, and creditors hope to recover their money.

 

"It's hard to stimulate consumer demand and confidence if people don't have money in their pockets," said Oscar Choi, Chief Investment Officer at Hong Kong-based Oscar and Partners Capital.

 

The hopes of some homebuyers and investors in Evergrande's wealth management products are "fading away."

 

"After looking at many projects, I chose Evergrande because I thought a property developer this large wouldn't collapse, but I was wrong," wrote one user waiting for their home on the social media platform Douyin.