Editorial | Evergrande delisting brings painful economic chapter to a close
The move comes at the right time as the Hong Kong stock exchange must maintain the integrity of listed companies and its own credibility
Beijing realised the market was unsustainable. Through stringent policies and restrictions, it let the bubble pop rather than kicking the proverbial can down the road. The fall of many high-profile developers – with that of Evergrande being the most spectacular – has been the inevitable result.
Evergrande’s liquidators rightly put the firm – which has the dubious distinction of being the world’s most indebted developer – out of its misery rather than seeking an extension of the trading suspension. The company was first listed in Hong Kong in 2009. Founder Hui Ka Yan, also known as Xu Jiayin, turbocharged its rapid growth through recklessly high leverage and selling developments before they were even built. At its peak, it had more than 1,300 projects in more than 280 Chinese cities.
Once the poster child of China’s property boom, it collapsed under debts of US$300 billion, which precipitated the broader cash crunch that shook the very foundations of the mainland’s property sector. That also marked the dramatic fall of Hui, once considered Asia’s richest man.
Beside running the country’s largest developer into the ground, he also provoked Beijing’s displeasure for his ostentatious lifestyle at a time when greater equality and shared wealth among the people were being encouraged as state policy.