The latest developments on Evergrande's financial crisis

On January 29,fca supervision 2024, the official website of the judiciary of the Hong Kong Special Administrative Region released a notice about the hearing for the liquidation petition of China Evergrande Group, which began at 9:30 am on that day (January 29), and the Hong Kong court officially issued a winding-up order to Evergrande Group.

Some investors may not be clear about what a winding-up order is. A winding-up order refers to a compulsory liquidation carried out by the court according to the law.

When a company cannot continue to operate or pay debts due to insolvency, it must stop all business activities according to legal procedures. All assets are sold off as soon as possible and debts are repaid in an ordered manner, after which the company is declared dissolved.

Although many people had anticipated this day, it was still shocking when it finally arrived. Even a super business empire like Evergrande could collapse in a short period of time.

Evergrande Group was established in Guangzhou in 1996, and in 1997, it formed Evergrande Real Estate. At the time of the Asian financial crisis, Evergrande Group seized the opportunity and developed rapidly with the favorable winds.

In just two years, it became one of the top ten real estate companies in Guangzhou. In the early 21st century, it began to prosper and expand nationwide. On November 5, 2009, Evergrande was successfully listed on the Hong Kong Stock Exchange.

On the day of the listing, the company’s share price closed at 34.28% above its offering price, reaching a total market value of 70.5 billion Hong Kong dollars, becoming the largest overseas enterprise based in the mainland and listed in Hong Kong.

After going public, Evergrande Group accelerated its pace of development even more. Supported by real estate, it soared to new heights. In 2021, its sales volume even reached more than 443 billion yuan.

Although there were doubts about policies, the international environment, and debt issues at this point, and related institutions and departments held frequent meetings with Evergrande Group, they were like a downhill car that could no longer stop.

On January 10, 2022, Evergrande Group moved back to Guangzhou from Shenzhen, already showing signs of exhaustion.

In 2023, Evergrande began to experience frequent financial distress. Nearly every month there was new information on the execution of debts, involving all parts of the country. The vast web-like empire began to catch fire, and the flames spread from Evergrande's surrounding companies and projects step by step towards the core.

By January 2024, the flames were still raging, and now they had finally reached the center. A winding-up order for a company is like a critical condition notice, and the "relatives" need to prepare themselves.

After the announcement of the winding-up order on January 29, Evergrande's stock price completely plummeted, falling more than 20%, with other related stocks also experiencing significant declines.

Subsequently, Xia Haijun, the CEO of Evergrande Group, responded to the media regarding the issue of the winding-up order of China Evergrande. Xia Haijun stated that the group will now face difficulties and problems head-on, taking all legal and compliant measures to steadily promote the normal operation of the group's business, while ensuring the legitimate rights and interests of domestic and foreign creditors.

At the same time, the group will actively communicate with the liquidator, cooperate with the liquidator according to the law, and proceed with debt resolution work in accordance with international practices and market rules. In addition, Evergrande will also steadily advance key tasks such as guaranteed delivery of homes.

The once world's top 500 enterprise and the leading domestic real estate company collapsed like a dangerous building within just two years amidst explosions, leaving behind ruins and a cloud of smoke.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.