September 18, 2021

EVERGRANDE: WHY THE CHINESE PROPERTY GIANT IS CLOSE TO COLLAPSE.

The Hong Kong-based developer is sinking under a mountain of liabilities totaling more than $300 billion (€254 billion) after years of borrowing to fund rapid growth.

Evergrande has stepped up acquisitions in recent years, taking advantage of a real estate frenzy.

But the property giant began to falter after Beijing introduced new measures in August 2020 to closely monitor and control the total debt level of major property developers.

Evergrande relied on presales to finance itself and keep its activities afloat, and the crackdown forced the group to offload properties at increasingly steep discounts.

Investors have made down payments on around 1.5 million properties, Bloomberg reported, citing data from December.

Many buyers have expressed concern on social media about whether they will get their money back after housing projects were suspended.

Evergrande was downgraded by two credit rating agencies last week and its Hong Kong-listed shares have collapsed by more than 80% this year.

On Monday, the Shanghai Stock Exchange paused trading in Evergrande’s May 2023 bond after it fell more than 30%.

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The Hong Kong-based developer is sinking under a mountain of liabilities totaling more than $300 billion (€254 billion) after years of borrowing to fund rapid growth.

Evergrande has stepped up acquisitions in recent years, taking advantage of a real estate frenzy.

But the property giant began to falter after Beijing introduced new measures in August 2020 to closely monitor and control the total debt level of major property developers.

Evergrande relied on presales to finance itself and keep its activities afloat, and the crackdown forced the group to offload properties at increasingly steep discounts.

Investors have made down payments on around 1.5 million properties, Bloomberg reported, citing data from December.

Many buyers have expressed concern on social media about whether they will get their money back after housing projects were suspended.

Evergrande was downgraded by two credit rating agencies last week and its Hong Kong-listed shares have collapsed by more than 80% this year.

On Monday, the Shanghai Stock Exchange paused trading in Evergrande’s May 2023 bond after it fell more than 30%.

Flashback to November of 2019: How to Conduct Business with Chinese Companies That See a Dark Future.

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