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Shares of China Evergrande collapsed 87% as trading resumed after a 17-month hiatus.
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The $50 billion real estate developer faces a massive debt load and a troubled balance sheet.
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On Monday, it became a minor stock after reporting a loss of 33 billion yuan in the six months ending June 30.
China Evergrande Group shares fell as much as 87%, diving into cheap stock territory after stock trading resumed Monday for the first time in 17 months.
By midday in Hong Kong, the share price was hovering around HK$0.35, with the developer’s market capitalization dropping to around $586 million. for every bloombergEvergrande was worth more than $50 billion in 2017.
The stock was last available for trading on March 18, 2022, and since its peak, it has lost 99% of its market value. Trading resumed after the company said its internal control systems met the listing rules on the Hong Kong Stock Exchange.
The sell-off followed the company’s announcement on Sunday that showed a loss of 33 billion yuan for the six months to June 30, according to the report, accumulating losses of 582 billion yuan from the past two years.
In all, Evergrande’s net loss for the first half of 2023 was 39.3 billion yuan.
China’s economic problems continue to escalateMuch of the concern stems from the real estate sector, where developers such as Evergrande, Country Garden and others face the risk of mounting debt and bankruptcy.
Some commentators have warned of this The back-to-back “Lehman moment” loomsAlthough economists told Insider that the situation in China is not quite comparable to the situation in the United States in 2008, due to the way the political economy was created.
However, this does not mean that there is no risk of disaster.
“If we think of the US real estate market crash of 2008, driven by the excessive wealth that was invested in real estate, versus what is happening in China with much larger amounts of wealth in this sector, the scale and severity of the crisis is probably much worse.” William Hirst, deputy director of the Center for Geopolitics at the University of Cambridge, told Insider in a recent interview:
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