On Thursday, Evergrande stocks sharply plunged as the property developer approached the brink of default risk.
Consequently, the real estate company sank 7.47% or 0.21 points to $0.33 per share.
Evergrande, with its outrageous amounts of credit, was marked as the world’s most indebted property developer.
In its 2020 annual report, the company posted $52.00 billion worth of debt to be paid within a year.
The developer explained that the pandemic-related implications and market slowdown significantly affected the company.
Additionally, the credit squeeze pushed Evergrande to miss debt payment deadlines and edge closer to bond defaults.
Subsequently, Chinese regulators demanded the firm’s assets sell-off to cover up payment delinquencies.
Evergrande’s sell-off prime candidates are its electric vehicles firm together with its other businesses.
Unfortunately, the sell-off would not suffice for the property developer’s rebound.
Moreover, the officials also helped the company reset its debt terms, which will allow the adjustment of the payment deadlines.
Meanwhile, traders look ahead to the possible default as they can purchase assets at a steep discount.
China Evergrande is one of the largest in the industry, with a market capitalization of $4.77 billion.
In addition, the company holds outstanding shares of $1.70 trillion and revenue of $1.70 billion.
Still, analysts discern if Evergrande is economically important enough to issue a bailout from the government.
Then, investors are mostly pessimistic about the possible Chinese government intervention.
Furthermore, almost three-quarters of China’s household wealth is in real estate.
Accordingly, the viable Evergrande default could trigger property values loss and lead to weaker consumption and investment.
Meanwhile, Evergrande’s rival Country Garden tumbled 7.51% or 0.54 points to $0.85 per share.
Asian Stocks Stumble as Evergrande Plunges
Moreover, Asian stocks stumbled as the property developer Evergrande plunged.
In China, the Shanghai Composite index declined 1.34% or 49.13 points to $3,607.09 per share.
Similarly, the Shenzhen Component index slipped 1.91% or 278.18 points to $14,258.13 per share.
In Hong Kong, the Hang Seng index edged down 1.46% or 365.36 points to $24,667.85 per share.
On the Tokyo Stock Exchange, the Nikkei 225 index fell 0.62% or 188.37 points to $30,323.34 per share.
Likewise, the broader TOPIX index dropped 0.30% or 6.23 points to $2,090.16 per share.
Consequently, South Korea’s KOSPI index inched down 0.74% or 23.31 points to $3,130.09 per share.