Chinese property giant Evergrande has announced that its shares will continue to be suspended until further notice. This development marks another significant setback for the heavily indebted company, which defaulted in 2021, triggering a real estate crisis in China. In August, Evergrande filed for bankruptcy in the United States in an attempt to protect its American assets while working on a restructuring deal.
This latest share suspension comes just a month after the firm’s previous 17-month suspension was lifted. Once valued as the world’s most valuable property developer, Evergrande now finds itself at the epicenter of a real estate crisis that poses a significant threat to the world’s second-largest economy.
With debts exceeding $300 billion, the company has been aggressively trying to raise funds by selling assets and shares to meet its obligations to suppliers and creditors. Most of Evergrande’s debt is owed to individuals within China, including many ordinary citizens who have invested in properties that remain unfinished.
The 2021 default by Evergrande sent shockwaves through global financial markets, as the property sector accounts for approximately a quarter of China’s economy. Over the past year, several other major Chinese developers have also defaulted, with many struggling to secure funding for their ongoing projects.
The potential consequences of Evergrande’s collapse are significant. Buyers who have already paid deposits for properties that may never be completed could lose their investments. Companies doing business with Evergrande, including construction firms and materials suppliers, are at risk of substantial losses that could push them into bankruptcy.
Moreover, a default by Evergrande could impact China’s financial system, leading banks and lenders to reduce their lending. This could trigger a credit crunch, making it difficult for companies to access affordable financing. Such a scenario would hinder economic growth and potentially deter foreign investors, eroding confidence in China as an attractive destination for investment.