Post by bcellphonelist on Feb 23, 2024 22:26:09 GMT -6
A court in Hong Kong orders China Evergrande, the world's most indebted real estate company, to liquidate its subsidiary in the territory after a failed attempt to restructure a $300 billion debt with banks and bondholders, raising concerns about the growing debt in China. China Evergrande Group is the largest among several Chinese developers that have gone bankrupt since 2020 under pressure from authorities to control their debt, which the Communist Party considers a threat to the Asian country's weak economic growth. However, the campaign against excessive debt has plunged the sector into crisis and has become a drag on the economy, as many other companies face problems and their difficulties impact financial systems inside and outside China.
Previously, global financial markets were hit by fears that Evergrande could cause a global recession. However, Chinese regulators assured that the Switzerland Mobile Number List risks could be controlled, since only a small part of Evergrande's debt was with foreign creditors. Judge Linda Chan ruled that it was appropriate for the court to order the closure of Evergrande's business due to the company's lack of progress in presenting a viable restruct Saudi Arabia Mobile Number List uring proposal, as well as the firm's insolvency. It is still unclear how this liquidation order will affect the Chinese financial system. Evergrande shares in Hong Kong fell about 21% on Monday before trading was suspended. However, Hong Kong's benchmark Hang Seng Index rose 0.9% and other real estate companies rose in value.
Fergus Saurin, a lawyer representing a group of creditors, said he was not surprised by the result, since the company has not cooperated and last-minute attempts have led to no results. Evergrande CEO Shawn Siu told Chinese media that the company deeply regretted the liquidation order. He clarified that this only affects the Hong Kong-listed division of China Evergrande, while the company on the Chinese mainland will continue to operate and deliver properties to buyers. China's economic boom has been driven by the real estate sector, but construction companies took on significant debt as they built apartment and office towers in cities. This has led to total household, business and government debt in China being equivalent to more than 300% of annual economic output, an unusually high figure for a middle-income country. The real estate crisis has also affected China's opaque banking industry, where some institutions offer financial services but operate outside of banking regulation, as is the case with Zhongzhi Enterprise Group. This entity, which lent a large amount of money to developers, has declared itself insolvent.
Previously, global financial markets were hit by fears that Evergrande could cause a global recession. However, Chinese regulators assured that the Switzerland Mobile Number List risks could be controlled, since only a small part of Evergrande's debt was with foreign creditors. Judge Linda Chan ruled that it was appropriate for the court to order the closure of Evergrande's business due to the company's lack of progress in presenting a viable restruct Saudi Arabia Mobile Number List uring proposal, as well as the firm's insolvency. It is still unclear how this liquidation order will affect the Chinese financial system. Evergrande shares in Hong Kong fell about 21% on Monday before trading was suspended. However, Hong Kong's benchmark Hang Seng Index rose 0.9% and other real estate companies rose in value.
Fergus Saurin, a lawyer representing a group of creditors, said he was not surprised by the result, since the company has not cooperated and last-minute attempts have led to no results. Evergrande CEO Shawn Siu told Chinese media that the company deeply regretted the liquidation order. He clarified that this only affects the Hong Kong-listed division of China Evergrande, while the company on the Chinese mainland will continue to operate and deliver properties to buyers. China's economic boom has been driven by the real estate sector, but construction companies took on significant debt as they built apartment and office towers in cities. This has led to total household, business and government debt in China being equivalent to more than 300% of annual economic output, an unusually high figure for a middle-income country. The real estate crisis has also affected China's opaque banking industry, where some institutions offer financial services but operate outside of banking regulation, as is the case with Zhongzhi Enterprise Group. This entity, which lent a large amount of money to developers, has declared itself insolvent.