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Heavily indebted, Evergrande stocks tumble

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On Monday, Evergrande, one of China’s most indebted private conglomerates, was badly beaten on the Hong Kong stock exchange, losing more than 12% at a time when the group’s financial health is worrying.

Evergrande, one of China's most indebted private conglomerates
Since the real estate boom began, Chinese giant Evergrande has multiplied its acquisitions and profited from the sector’s frenzy, but is now burdened with debt.

The Chinese real estate giant has diversified its acquisitions in recent years and has benefited from the boom in the sector, but it is now burdened with debts.

A possible bankruptcy of the group, which claims to employ 200,000 people and generate 3.8 million jobs indirectly in China, would have major effects on the country’s economy.

In a relatively unusual move, Chinese authorities publicly challenged the company’s officials to address the company’s debt problems.

On Monday, the group’s shares fell by more than 12% on the Hong Kong stock exchange. Over the past year, they have lost nearly 70% of their value.

Last week, Evergrande said it was in discussions with potential investors about selling some of its assets.

There have been reported talks with its compatriot Xiaomi, a giant in smartphones and electronics, about Evergrande Auto, which operates in the electric car market.

Investors are not reassured by the hypothesis of a sale: Evergrande Auto shares dropped 26.8% on Monday.

The subsidiary was founded in 2019 and does not currently market any vehicles.

Despite its size, the Evergrande Group is considered by Beijing to be “an enormous, troubled enterprise with alarming debts and systemic financial risks.”

According to the Fortune 500, Evergrande is the 152nd largest company in the world based on revenue.

The group also owns a soccer club: Guangzhou FC. It is coached by Italian world champion Fabio Cannavaro.

With its Evergrande Spring brand, the group is also present in the booming mineral water and food industries.

Evergrande has also made investments in tourism, leisure, internet, and insurance.

For MetaNews.

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Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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