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China Evergrande Exits Hong Kong Stock Market

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Stocks of China Evergrande Group, which carries significant debt, were removed from the Hong Kong Stock Exchange on Monday, marking a bleak turn of events for the previously thriving real estate company.

An exchange committee has previously determined this month to delist Evergrande following its failure to fulfill a July requirement to restart trading — which was halted from the beginning of last year.

The removal from trading on Monday represents another significant step for a company whose difficult decline has come to symbolize the ongoing challenges within China’s real estate industry.

Previously the nation’s largest real estate company, Evergrande had a valuation exceeding $50 billion at its height and played a significant role in driving China’s swift economic expansion over the past few decades.

However, it failed in 2021 following many years of difficulty in settling debts with lenders.

In January 2024, a court in Hong Kong issued an order to wind down Evergrande, determining that the firm was unable to present an effective strategy for repaying its debts.

Investigators have taken steps to reclaim investors’ funds, such as initiating legal action against PwC and its affiliated company in Mainland China over their involvement in auditing the financially troubled developer.

The company’s financial obligations exceed the previously reported figure of $27.5 billion, as stated in a document filed early this month by liquidators Edward Middleton and Tiffany Wong.

It was stated that China Evergrande Group functioned as a parent company, with receivers having taken over management of over 100 firms under its umbrella.

The story of Evergrande — along with comparable challenges experienced by other real estate companies such as Country Garden and Vanke — has drawn significant attention from analysts evaluating the state of the world’s second-biggest economy.

Following an extended period of construction growth driven by fast urban development, China’s real estate industry started displaying concerning indicators in 2020, after Beijing introduced regulations aimed at curbing high levels of debt.

Following Evergrande’s collapse the next year and ongoing challenges throughout the sector, authorities have found it difficult to revive the previous period of rapid growth.

The crisis has also affected public confidence during a period when experts claim China needs to adopt a new development strategy focused increasingly on internal consumption instead of investments.

New property prices in a group of 70 Chinese cities kept declining in July, according to official figures released early this month.

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