Hong Kong-listed shares of Evergrande units stabilise as liquidation seen unshackling business, assets from debt crisis

Name: A vanishing fairyland dream: how China Evergrande rose, then crashed
Uploaded: 2024-01-30T04:06:24.000Z
Duration: 8 min 36 s
Description: A vanishing fairyland dream: how China Evergrande rose, then crashed

Evergrande New Energy Vehicle Group and Evergrande Property Services resumed trading after a sudden halt on Monday

Shares in the parent remain suspended as two court-appointed liquidators took control of the insolvent mainland developer

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A woman walks in front of a screen displaying Evergrande’s stock prices among others outside the Exchange Square, after a court ordered the liquidation of China Evergrande Group, in Hong Kong, China January 29, 2024. REUTERS/Lam Yik

Jiaxing Li

Published: 12:06pm, 30 Jan 2024Updated: 4:56pm, 30 Jan 2024

Shares of entities in the China Evergrande group stabilised, after a sell-off triggered by the impending liquidation of the mainland property developer. Some investors bet their outlook will improve by being unshackled from the debt crisis engulfing the parent company.

Carmaker Evergrande New Energy Vehicle Group advanced 4.4 per cent to HK$0.239 at in Hong Kong on Tuesday, while Evergrande Property Services jumped as much as 9 per cent before losing 3.8 per cent at HK$0.375. The stock lost 18 per cent and 2.5 per cent, respectively on Monday.

Trading in China Evergrande Group remained suspended after the stock sank 21 per cent on Monday, the company said in an exchange filing.

The High Court in Hong Kong ordered the Chinese developer to be wound up at a hearing, after it failed to repay a creditor and show progress to reorganise its debt. Eddie Middleton and Tiffany Wong from Alvarez & Marsal have been appointed as joint liquidators to take control of its operations.

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A vanishing fairyland dream: how China Evergrande rose, then crashed

The collapse of China Evergrande is the biggest corporate failure in Hong Kong, based on its 2.39 trillion yuan (US$340 billion) of total liabilities on June 30.

The liquidation effectively killed the debt restructuring scheme agreed with a group of creditors in March last year, which included issuing new debt instruments that could be converted into shares in the two subsidiaries. This would have eliminated the risk of stock dilution to minority shareholders, analysts said.