Evergrande Stock Tumbles as Fears of Collapse Grow

Shares of China’s Evergrande Group crashed again on Wednesday as fears grew of a potential liquidation of the company.

The troubled developer’s stock closed down 19% at 4 US cents, putting its market cap at just $539 million. The collapse took this week’s losses to 42%. The company has lost 99.9% of its value since peaking in October 2017.

Evergrande’s troubles mounted this week, after it warned that its offshore debt restructuring plan may be in jeopardy because of a regulatory investigation into its main subsidiary in mainland China.

Investors had enjoyed a short spell of relief last month when Evergrande reported a significant narrowing in its losses for the first half of the year thanks to a rise in revenue because of a short term boom.

But the news since has been overwhelmingly negative, and a growing number of investors are reportedly seeking to wind up the company if it is unable to come up with a new survival plan soon.

Evergrande has been trying to implement a government-supervised restructuring of its debts, which stood at $328 billion at the end of June. It recently filed for bankruptcy protection in the United States as part of the process.

Previously China’s second biggest real estate company, Evergrande’s default in 2021 ignited a crisis in the property sector that continues to weigh on the wider economy.

The property sector in China is so large that analysts feel without a strong rebound overall economic growth will likely be substantially lower than in recent decades.