Protests outside Evergrande offices as stock trading resumes
Shares of China Evergrande jumped as stock trading resumed, but investors who were worried their money would be used to keep the firm afloat staged a protest outside the Guangzhou headquarters.
China Evergrande’s shares gained 10% as stock trading resumed on Tuesday after being suspended the day before. Trading was restored after Evergrande announced that a government order to tear down its 39 buildings on Hainan resort island would not affect the rest of its projects there.
The demolition order came over the weekend, forcing the company to halt the sale of shares until the situation was resolved. Evergrande confirmed late Monday that the order only concerned 39 buildings at Hainan’s Ocean Flower Island, but the rest of the approximately 60,000 structures in the resort development, which cost over $13 billion, will not be affected. The reason for the demolition order has not been disclosed.
Meanwhile, the heavily indebted company’s investors descended on Evergrande’s offices in Guangzhou on Tuesday morning. A crowd of around 100 people, worried that their money would be used to pay off the company’s debts, shouted, “Evergrande, return our money!” Reuters reported.
The developer currently owes more than $300 billion on various bonds, and was recently declared in default by two ratings firms, after missing deadlines on dollar bond payments.
The company’s contracted sales fell 39% in 2021 from the year before, to roughly $69.5 billion.
Evergrande, once China’s leading real estate developer, has now claimed the title of world’s most indebted. Unable to pay its many suppliers and contractors for a seemingly infinite number of projects, including a Chinese Disneyland-style amusement park, it is now on the brink of a massive default, which has had a broader effect on China’s property development sector. As the company’s credibility plunges, the entire industry in China is experiencing a slowdown in foreign investment.
The situation with Evergrande appears to be contagious, as several other Chinese developers announced their inability to pay up on bonds in the fall. To add fuel to the fire, in October, China’s National Bureau of Statistics published data showing that home prices in the country had dropped month-on-month for the first time since 2015.
For more stories on economy & finance visit RT's business section
