Shares of Chinese Evergrande Fall 10.5 Percent in Value

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Shares of the Chinese real estate company Evergrande fell 10.5 percent in value on Thursday. That happened after a takeover of the real estate management branch of the company in dire straits had been rejected.

 

Shares of Evergrande traded on the Hong Kong Stock Exchange for the first time since Oct. 4. However, trading in the shares was halted for more than three weeks due to takeover talks with Hopson Development. Chinese media wanted to deposit 4.3 billion euros for a 51 percent interest in the real estate management branch.

Evergrande decided to end the takeover talks itself because the company doubted whether industry peer Hopson had met all the conditions to make an offer, Evergrande wrote in a statement on Wednesday. Earlier, there were rumours that the talks were stalled because the Chinese province of Guangdong would not support the takeover.

Evergrande is struggling with a debt burden of more than 260 billion euros and is on the verge of bankruptcy. It is feared that if Evergrande falls, it could cause a knock-on effect in the Chinese real estate world. Two other Chinese real estate developers have already missed debt service deadlines in recent times. However, the Chinese government and the country’s central bank ensure that any bankruptcies do not threaten the entire financial system.

Before the stock market opened on Thursday, Evergrande had warned investors about the risks of investing in the company.

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