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China Evergrande liquidation sends shockwaves through financial markets

Livemint · 10m

A Hong Kong court has ordered the liquidation of China Evergrande Group, causing concern in China's financial markets. Trading of Evergrande related shares was halted and the Hang Seng Index rose 1.2%. Analysts agree that the delay in liquidation is surprising and clearing out Evergrande is seen as positive, but doubts remain about the impact on the property sector. There are concerns about the downturn in China's property sector and the effect on the progress of fixing it. The liquidation may also impact confidence among mainland creditors and potential buyers. Offshore creditors will depend on mainland courts recognizing or enforcing the winding-up order from Hong Kong to claim assets. Evergrande, the world's most indebted developer, has $300 billion liabilities and $240 billion assets. The liquidation petition was filed by an investor in June 2022 due to Evergrande's failure to honor an agreement.