Evergrande Crisis Deepens: Stocks Dive As China’s Largest Developer Tries to Recover

Shares of China Evergrande Group experienced a sharp drop of as much as 87% in their trading debut after a long suspension since March 21, 2022. The shares fell from their last close of 1.65 Hong Kong dollars to a mere 22 cents on Monday, leaving stakeholders in dismay. Despite a promising start to the year due to the relaxation of COVID-19 restrictions, the current economic scene presents a grim outlook.

Financial Health: Where Evergrande Stands

Evergrande’s recent financial report indicated significant challenges:

  • A posted loss of 39.25 billion yuan ($5.38 billion) for the six months ending in June, which, although significant, is smaller than the 86.17 billion yuan loss from the same period a year prior.
  • Reported revenue of 128.81 billion yuan, a significant rise from 89.28 billion yuan in June 2022.
  • Combined losses of $81 billion for 2021 and 2022 resulting from property writedowns, land returns, financial asset losses, and financing costs.
  • Total liabilities as of June this year were a staggering 2.39 trillion yuan, with total assets amounting to 1.74 trillion yuan.

Detailed Financials of Evergrande at the Hong Kong Exchange

Bankruptcy and Restructuring

  • Evergrande filed for Chapter 15 bankruptcy protection in a U.S. court in July, safeguarding its U.S. assets from creditors while exploring a restructuring plan overseas.
  • The developer defaulted in 2021, announcing a restructuring program offshore in March due to its struggles with project completions and debt repayments.
  • Recently, the company revealed a multi-billion dollar strategy to reconcile with international creditors, indicating that between $36 billion to $44 billion would be required to complete pending property projects.
  • In line with restructuring, Evergrande has proposed a debt swap into new notes and equities in two subsidiaries.

Significance in China’s Economy

Evergrande was not just any developer:

  • For several years, the Shenzhen-based firm was China’s top property developer in sales.
  • The company’s default in 2021 precipitated a crisis in China’s real estate sector, previously accounting for nearly 30% of the nation’s economy.

Relaxation of Rules to Support Real Estate

In an attempt to revive a struggling industry:

  • Beijing announced several measures over the weekend to stimulate home buying and breathe life into the real estate sector.
  • Regulations have been relaxed, including a provision that permits local governments to consider previous mortgage holders as first-time homebuyers in major cities.
  • Income tax rebates will be extended for those buying new homes after selling previous properties within a year.
  • Despite these interventions, most analysts believe that additional efforts, such as reduced deposit rates and more funding, will be necessary to prevent a collapse in China’s property market.

Market Response

While shares of most Chinese property firms saw a boost after the regulatory changes, Evergrande experienced the opposite. Properties like Country Garden saw a 2.5% rise in Hong Kong, while Guangzhou R&F Properties surged by almost 4%. However, experts, including those from Nomura, maintain that the current measures may not be enough to reverse the downturn in China’s property sector.


Evergrande, once China’s real-estate titan, faces an uncertain future. Its dramatic stock plummet on Monday, combined with its significant financial losses and debt, highlights the company’s challenges. As the company embarks on a complex debt restructuring journey and China’s government intervenes to stabilize the property market, stakeholders worldwide watch with bated breath.

Jonas Muthoni is the Founder and CEO of Deviate Agency; he has contributed to several online publications, including Forbes. He loves to write on topics ranging from leadership and business to technology. Writing has always been his passion, and He has been writing for online publications over the last several years.