Shares of the cash-strapped Chinese real estate company Evergrande fell
Following the disclosure of the scope of its financial issues, shares of the heavily indebted Chinese real estate behemoth Evergrande have plummeted.
The company claimed it is having trouble selling assets quickly enough to pay off its enormous $305 billion (£220 billion) in debts.
The corporation additionally stated in a statement that "tremendous pressure" was being placed on its cash flow.
The announcement was made only a few hours after on Monday, irate demonstrators surrounded the company's Shenzhen headquarters.
Evergrande cited "ongoing negative media reports" that "have dampened the confidence of potential property purchasers" in its statement to the Hong Kong Stock Exchange.
The most indebted real estate developer in the world said that it was collaborating with financial advisors to look into potential solutions to its issues.
Tuesday's trade in Hong Kong saw an over 12% decline in Evergrande shares. In the previous six months, the company's stock price has decreased by more than 80%.
Numerous investors protested at the company's headquarters on Monday. They chanted, "Give us our money back," urging the business to repay debts and financial items.
According to news site Caixin, they were greeted by a large number of uniformed security guards and a company official who read them a proposition for reparations.
Evergrande stated that reports of its imminent bankruptcy and restructuring were "totally untrue" on Monday as well.
Why does Evergrande's debt issue matter?
One of China's largest real estate developers, Evergrande, has expressed concern over its ability to pay back investors.
Ratings agencies have regularly downgraded its bonds-based debts due to worries about how difficult it has been to raise the funds to make repayments.
The second-largest economy in the world's banking system may be at risk due to the company's debt issues, according to some analysts.
There are worries that other deeply indebted developers would also be considered as at risk as the company attempts to quickly sell assets to avoid defaulting on its liabilities.
Due to the fact that more than a million people are waiting to move into new homes while hundreds of housing projects are still unfinished, Evergrande's problems have also raised concerns for the broader Chinese economy.
What is Evergrande's mission?
Evergrande, previously the Hengda Group, was established in Guangzhou, southern China, by businessman Hui Ka Yan in 1996.
Using mostly borrowed funds, he expanded the business from a modest local business to a massive real estate conglomerate.
According to the corporate website, Evergrande Real Estate currently has more than 1,300 projects spread over more than 280 cities in China.
The group's activities today go far beyond just real estate development, and include anything from food and beverage companies to electric car manufacturers, media production companies, and football club ownership.
According to Forbes, Mr. Hui has a personal fortune of almost $11 billion.
No comments:
Post a Comment