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Evergrande Removed From Hong Kong Stock Exchange After Billion-Dollar Debts, Marking The Definitive Collapse Of The Real Estate Giant And Global Impacts
The Chinese real estate giant Evergrande was officially removed from the Hong Kong stock market on Monday (08/25). The decision ends over a decade of the company’s presence on the exchange and marks a decisive chapter in the downfall of the group that was once valued at over US$ 50 billion.
Experts claim that the delisting was inevitable and definitive. “Once removed from the exchange, there is no going back,” explains Dan Wang, director for China at the Eurasia Group consultancy.
According to her, the company’s collapse could have significant repercussions not only on the Chinese economy but also globally.
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The real estate sector represents nearly a third of China’s economy. Furthermore, for decades, the country’s expansion has been linked to this sector, in which Evergrande stood out.
Many Chinese families invested their savings in real estate, which increases the social and economic impact of the crisis.
Global Impact
The global impact of Evergrande’s collapse is not limited to China’s borders. International funds and banks exposed to the company’s debts face the risk of billion-dollar losses, while investors lose confidence in the sector.
The slowdown in the Chinese real estate market reduces demand for raw materials, affecting exporters from emerging countries.
Moreover, economic uncertainty puts pressure on stock markets and currencies worldwide, amplifying global financial instability.
The Rise And Fall Of Evergrande
A few years ago, Evergrande symbolized the so-called Chinese economic miracle. Its founder, Hui Ka Yan, came from humble beginnings and, in 2017, topped Forbes’ list as Asia’s richest person, with a fortune estimated at US$ 45 billion.
Today, his net worth has shrunk to less than US$ 1 billion. In March of last year, Hui was fined US$ 6.5 million and permanently banned from China’s capital markets after his company admitted to overstating revenues by US$ 78 billion.
Lawyers are now examining the possibility of creditors seeking the businessman’s personal assets.
Before the collapse, Evergrande had 1,300 projects in 280 Chinese cities. Its empire also included an electric car manufacturer and Guangzhou FC, the most successful football team in the country, which at one time featured Brazilians like Scolari, Robinho, and Paulinho. The club was expelled from the league in 2024 for non-payment.
Evergrande’s growth was sustained by a debt of US$ 300 billion, making it the most indebted construction company in the world.
The decline began in 2020 when the Chinese government limited the amount of loans that real estate developers could take on.
Out of breath, the company started offering properties at steep discounts and accumulated defaults on overseas debts.
In August 2023, it filed for bankruptcy in New York to protect its assets in the US. Months later, the High Court of Hong Kong ordered the liquidation of the company. Since then, its shares have been suspended and have lost more than 99% of their market value.
Unpayable Debts And Ongoing Liquidation
The Hong Kong court ordered definitive liquidation in January 2024, after Evergrande failed to present a viable plan to deal with its billion-dollar liabilities abroad.
By early August of this year, it was revealed that the company still owes US$ 45 billion and managed to sell only US$ 255 million in assets.
Analysts do not believe in restructuring. For Dan Wang, the delisting is a symbolic milestone. Professor Shitong Qiao from Duke University states that the main question is which creditors will be paid and how much can be recovered in the process. The next hearing is scheduled for September.
Impacts On The Chinese Economy
The downfall of Evergrande adds to other economic problems China faces, such as the tariff war initiated by Donald Trump, high local government debt, low consumption, unemployment, and an aging population.
According to Wang, the real estate crisis is currently the biggest obstacle to the Chinese economy. This is because the sector accounts for nearly a third of GDP and also a significant part of local government revenue.
For Qiao, there is still no alternative capable of sustaining growth on a comparable scale. Highly indebted companies are laying off workers en masse, and those who remain face salary cuts, points out Jackson Chan from Bondsupermart.
Moreover, many families, who see real estate as their main form of investment, have lost about 30% of their savings value due to falling prices, according to Alicia Garcia-Herrero, chief economist at Natixis. This reduces consumption and the population’s ability to invest.
Government Response Efforts
The Chinese government has launched stimulus packages to revitalize the real estate sector and boost consumption. Among the measures are financial aids for new buyers, support for the stock market, and incentives for the purchase of electric cars and appliances.
Still, China’s growth has fallen to about 5% per year. Although this rate is high compared to Western countries, it is considered low for a country that was growing above 10% a decade ago.
Despite efforts, experts do not believe the crisis is over. Other companies face liquidation orders, such as China South City Holdings.
Meanwhile, rival Country Garden struggles to renegotiate US$ 14 billion in external debts. The final hearing is scheduled for 2026.
The Future Of The Chinese Real Estate Market
“The real estate sector is in trouble. More companies will go bankrupt,” says Qiao. So far, the government has shown no willingness to rescue builders, fearing it might encourage risky behavior in an already indebted market.
Nonetheless, Chan believes that the stimuli have a positive effect and that the bottom may have already been reached, although recovery will be slow. In June, Goldman Sachs predicted price declines until 2027. For Wang, the market will only balance in two years, when demand meets supply.
However, Garcia-Herrero views the situation more pessimistically. For her, there is still “no real light at the end of the tunnel.”
Change Of Priorities
Although the real estate market has sustained economic expansion for decades, Beijing’s priorities have shifted.
President Xi Jinping is focusing efforts on high-tech sectors such as electric vehicles, renewable energy, and robotics.
According to Wang, China is undergoing a “deep transition to a new era of development.” In this context, Evergrande’s collapse represents not only the end of a business empire but also a turning point for the Chinese growth model.
The exclusion of Evergrande from the Hong Kong stock exchange summarizes years of uncontrolled expansion, unsustainable debts, and a sector now struggling to survive in a single gesture.
Meanwhile, families, investors, and creditors await the next chapters of a crisis that has already entered the annals of economic history.
With information from BBC.
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