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## Shares in Evergrande Fall by 80% as Trading Resumes in Hong Kong

### By Annabelle Liang, Business reporter

#### 28 August 2023, 02:15 BST
#### Updated 11 minutes ago


Shares of the embattled Chinese developer Evergrande have plummeted by approximately 80% as they resumed trading in Hong Kong for the first time in a year and a half.

The steep decline in Evergrande’s shares reflects the company’s significant loss of value, which has surpassed 99% over the past three years. This decrease can be attributed to the Chinese government’s crackdown on property firms.

Evergrande’s financial troubles have sparked a real estate market crisis, posing a threat to the world’s second-largest economy.

Despite the difficulties, the company’s recent financial report shows signs of improvement. Evergrande posted a loss of 33 billion yuan ($4.5 billion; ┬ú3.6 billion) for the first half of this year, marking an improvement compared to the 66.4 billion yuan loss reported during the same period last year. Additionally, the company’s revenue for the first six months of this year surged by 44% to 128.2 billion yuan, while its cash reserves declined by 6.3% over the same period.

The trading of Evergrande shares had been suspended since March last year, highlighting the severity of the situation.

To address the crisis, Qian Wang, chief Asia Pacific economist at investment firm Vanguard, emphasizes the need for policymakers to prevent financial contagion and limit spillover into the broader financial system. Wang suggests that policymakers should provide increased liquidity and credit support to the economy and the real estate sector.

Amidst concerns about China’s property market and its impact on the post-pandemic economic recovery, China has taken steps to stimulate its capital market and boost investor confidence. One such measure was the halving of the 0.1% tax on stock trading. Additionally, the country’s central bank recently reduced one of its key interest rates for the second time in three months.

These actions have resulted in higher trading indexes in Hong Kong and mainland China.

Evergrande’s struggles are not isolated, as other major property developers in China face similar challenges. Country Garden, for instance, warned of a potential loss of up to $7.6 billion (┬ú6 billion) for the first six months of this year. Moody’s rating agency downgraded the company’s rating, citing increased liquidity and refinancing risks.

These issues in China’s real estate industry stemmed from the introduction of new regulations in 2020 to control the borrowing abilities of large real estate firms. Previously, Evergrande had aggressively expanded, accumulating debts of over $300 billion and striving to become one of China’s largest companies.

As Evergrande works to renegotiate agreements with creditors after defaulting on debt repayments, the company’s financial problems have had a ripple effect on the country’s property industry. Several other developers have also defaulted on their debts, leaving numerous building projects unfinished throughout China.

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