“Enough is enough,” said a Hong Kong judge as she ordered the liquidation of Chinese property developer Evergrande on Monday. Evergrande first defaulted on its $300bn debt pile in December 2021, marking the start of a wider downturn in China’s massive property sector, says Mariko Oi on the BBC.
Evergrande’s constantly delayed efforts to strike a deal with creditors have finally exhausted the court’s patience. Liquidators will now attempt to restructure Evergrande, but “it is unclear how far the Hong Kong ruling will hold sway in mainland China”, where most of the firm’s assets are located. Foreign bondholders will be left deeply out of pocket, George Magnus of SOAS University of London tells Amy Hawkins in The Guardian. A bailout is unlikely. Beijing certainly doesn’t “want to give priority to making good the losses of foreign creditors over domestic citizens”.
The court order “sets in motion a complex, multiyear process” that will be watched closely by other embattled property companies, says Nikkei Asia. Evergrande’s Hong Kong-listed shares, already down by 99% since mid-2020, tumbled by a further 20% on Monday. Yet the wider market impact may be limited since Evergrande’s problems were already well known.
A reminder of China’s property woes is not helping local stocks, which have suffered a “protracted” $6trn “rout” since 2021, says Laura He for CNN. Worried officials have recently launched a series of market-boosting measures recently, including easing bank-reserve rules in order to inject extra liquidity into markets. Hong Kong stocks reacted positively, gaining 4.2% last week. At the weekend securities regulato
