HONG KONG: Shares in the property services arm of troubled Chinese property giant Evergrande collapsed Thursday, wiping out half the firm’s market value, as they resumed trading after being suspended for more than a year.
Once China’s biggest developer, Evergrande is drowning in a sea of debt and has become a symbol of the country’s property crisis that continues to send shudders through the world’s number two economy.
Last year trading in the firm and a number of its subsidiaries listed in Hong Kong was halted as they failed to meet deadlines for releasing financial results.
However, Evergrande Property Services Group finally announced its earnings in June and showed a net profit of 1.48 billion yuan (US$206 million) for 2022, reversing a net loss of 388.8 million yuan (US$54 million) from the year before.
Still, on Thursday, traders decided to unload their shares in the firm, sending its price falling as much as 50% and knocking $1.6 billion off its value.
The selloff comes after Evergrande’s electric vehicle subsidiary, which was also suspended last year, plunged by more than 60% last Friday on its first day back.
Trading in parent company China Evergrande remains suspended, despite having released its results.
The real estate behemoth unveiled a debt restructuring proposal earlier this year, offering creditors a choice to swap their debt into new notes issued by the company and equities in two subsidiaries.
A winding-up petition filed against Evergrande, set to be heard in a Hong Kong court, has been pushed back to October.
Evergrande first defaulted on its bonds in 2021, sending shudders through the world’s number two economy and fanning fears of a global contagion.
Developers last summer triggered protests and mortgage boycotts from Chinese homebuyers after failing to deliver housing projects.
Beijing has recently sought to bolster the sector by cutting mortgage rates, slashing red tape and offering more loans to developers.