The Evergrande, shares in the highly indebted Chinese property have plunged after it laid out the extent of its monetary issues.
The Evergrande, said, “The firm is struggling to sell their resources fast enough to support its massive $305bn of debts. An announcement issued by the firm also said that its cashflow was under a “tremendous burden”.
In the report to the Hong kong stock exchange- Evergrande blamed on “negative media reports” that have reduced the confidence of the property purchasers.
On Tuesday, Evergrande shares were down by more than 10% in Hong Kong. The firms’ shares have fall down by about 80% in the past six months. The owner also said it was working to financial advisors to investigate solutions for its issues.
After statement came few hours later “annoyed protestors” besieged the company’s headquarters in Shenzhen, China.
On Monday, loads of investors executed a protest at the company’s headquarters, in Shenzhen. They chanted “Give us our money” in protest, they called on the company to pay back their loans and financial products.
The Evergrande group, created by Hui Ka Yan in 1996, previously called Hengda group- is China’s second- major property developer. It is the largest group in the world by revenue, according to the 2021 fortune global 500 lists. The company is based in southern China Guangdong provinces and basically sells apartments to generally upper and middle division residents. The firm built more than $722 million in an initial public offering on the Hong Kong stock exchange, Oct 2009.
The firm currently owns over 1,300 projects in more than 170 cities across China. It is one of the 10 major real estate firm and one of the five largest real estate firm in Guandong- the others four are Country Garden, Guangzhou R&F Properties, Hopson Development, and Agile property.
The firm presently owns 45.8 million square meters of development and real estate projects in over 20 cities.
Why is Ever Grande’s debt problem significant?
Evergrande, one of largest property developer in China, has raised a worry of not be able to repay the investors. In current time, the firm is facing with more than $300 billion in debt.
Some specialists have proposed that the firm’s debt problem could present widespread risk to the financial system of the world’s second- largest economy. If the firm face the difficulty to sell assets, there are worries that other vigorously indebted developers may also be viewed as in danger.
Evergrande’s inconveniences have additionally caused different worries for the Chinese economy, as hundreds of housing projects stay incomplete and exceeding 1,000,000 individuals are holding on to move into new homes.