Experts predict that China Evergrande Group will cease to exist in the near future.
Six executives of the Chinese real estate giant China Evergrande Group, which owes more than$ 300 billion, have illegally sold their investments over the past four months, DW writes.
“As of May 1, 2021, a total of 44 people, who were then senior executives, owned 58 Evergrande Wealth investment products. From May 1 to September 7, 6 people bought 12 investment products in advance,” the company said in a statement.
The stock markets of the United States, Europe, and Asia are declining in October during trading due to the problems of the developer. The company’s shares on the Hong Kong Stock Exchange fell by 10% – to the lowest level since May 2010. This provoked a fall in stock markets around the world. The Hang Seng Property index, which tracks the shares of a number of Hong Kong developers, fell by almost 7% – to its lowest level since 2016.
On Monday, Evergrande also had to pay interest on bank loans. According to Bloomberg sources, Chinese authorities last week warned key creditors of the company that it will not be able to do so.
Last week, the company reported serious liquidity problems and the involvement of debt restructuring consultants. Evergrande’s debts exceed $ 300 billion. In total, by the end of this year, the company has to pay interest on $669 million in bonds. It is due to pay $83.5 million in interest on five-year dollar bonds and another $ 36 million in domestic bonds next Thursday.
Today, the company has about 800 unfinished projects across China, with about 1.2 million people still waiting to move into new homes.
In recent days, rallies have been held near the company’s headquarters, mostly suppliers, according to the Los Angeles Times. For example, Evergrande owed $300,000 to the company that cleaned the office. A representative of the cleaning company retells the words of the developer: “We have no money, do whatever you want.” Some of the suppliers were mortgaging their own homes to cover their work for Evergrande. They were sure that “such a large company” could not fail to pay. Now they are under pressure from both banks and their employees. After all, the entire supply chain of building materials for many years was realized through debt receipts Evergrande instead of cash.
The New York Times wrote that Evergrande can be considered the most credited developer in the world. Many experts are confident that the company will collapse in the near future. The publication cites several reasons for the company’s collapse. Yes, this was facilitated by the strengthening of control by Chinese regulators over lending to developers, which forced Evergrande to start selling its assets. Another problem is the slowdown in China’s real estate market and the declining demand for apartments.
