Debt-ridden Chinese developer Country Garden has suspended trading of its shares on the Hong Kong stock exchange after delaying the release of its annual financial results.
The company said last week it needed more time to gather information as it restructures its debt. It defaulted on its offshore debt last year and is facing a winding-up petition. Country Garden is not the only company in trouble. In January, a Hong Kong court ordered the liquidation of rival real estate giant China Evergrande.
Chinese Real Estate Market Under Pressure
The Chinese real estate industry has been under severe financial pressure since 2021, when the government introduced measures to curb the amount of money that developers can borrow. The aim of these measures is to reduce property price growth and prevent a bubble. Several major Chinese developers, including Evergrande and Country Garden, have defaulted on their debts in recent years.
The problems in China’s real estate market are having a major impact on the entire economy. The real estate sector accounts for about a third of the country’s GDP. Beijing has announced various measures to try to boost demand for housing, but these measures have not had a significant impact yet.
Regulators Accuse Evergrande of Fraud
Last month, China’s financial market regulator accused Evergrande and its founder Hui Ka Yan of inflating revenue by $78 billion over two years before the company defaulted on its debt. The mainland company Hengda Real Estate, part of the Evergrande Group, was fined $583.5 million. Mr. Hui faces a lifetime ban from entering China’s financial markets.
The situation in the Chinese real estate market is complex and has far-reaching consequences. The problems in this sector pose a serious threat to the stability of the Chinese economy and global markets.
