Chinese property giant Evergrande delisted after spectacular fall

Evergrande used to be the largest property developer in China, known for building thousands of homes and owning the country’s most successful football club. But after years of rapid growth fueled by borrowing huge amounts of money, the company has now been delisted from the Hong Kong stock market. This marks a major turning point for Evergrande, which once had a stock market value of over $50 billion. The company’s fall began when the Chinese government introduced new rules in 2020 to limit how much big property developers could borrow. Evergrande, which had built its business on $300 billion of debt, struggled to adapt. It started selling homes at big discounts to keep money coming in, but soon it couldn’t pay back its loans. The company defaulted on some of its overseas debts, and after years of legal battles, the Hong Kong High Court ordered Evergrande to be wound up in January 2024.

Evergrande’s founder, Hui Ka Yan, was once the richest person in Asia, but his fortune has dropped from $45 billion to less than a billion. He was fined $6. 5 million and banned from China’s capital market for life. Liquidators are now trying to see if they can recover money for creditors from his personal property. At the time of its collapse, Evergrande had 1,300 projects in 280 cities, and its empire included an electric car company and Guangzhou FC, the top football team. But the company’s debts became too much, and its shares lost more than 99% of their value. The liquidation process is ongoing, and the next hearing is set for September. Experts say the delisting is symbolic and shows just how serious the situation is. Now, the main question is how much creditors will get back.

Evergrande’s collapse has had a big impact on China’s economy. The property sector makes up about a third of the country’s economy and is a major source of income for local governments. The crisis has led to massive layoffs and pay cuts for workers in the industry. Many families in China put their savings into property, but with house prices dropping by at least 30%, their savings have lost value. This has made people less willing to spend and invest. The government has announced many measures to try to revive the housing market and boost the economy, such as helping new home buyers and supporting the stock market. Despite these efforts, China’s economic growth has slowed to around 5%, much less than the double-digit growth seen in the past. The property crisis is not over, as other big developers are still facing problems. The government is now focusing on high-tech industries like electric cars and renewable energy, signaling a shift in priorities for China’s future.