China's Evergrande shares halted after Hong Kong court orders liquidation

A Hong Kong court has ordered the liquidation of China Evergrande Group, a move likely to send ripples through China's crumbling financial markets as policymakers scramble to contain the deepening crisis.

Stock trading in Evergrande Property Services was halted after the winding-up order.

The wind-up will see the company being managed by provisional liquidators and addressing issues, including control by founder and Chairman Hui Ka Yan, Judge Linda Chan said. 

The ruling cements the homebuilder — carrying 2.39 trillion yuan ($333 billion) of liabilities — as the most prominent symbol so far of China’s real estate crisis, which has crimped economic growth and hurt consumer confidence. 

The developer failed to reach an agreement with creditors even after years of negotiations, with Hui placed under police control in September on suspicion of committing crimes.

“The liquidation order is not entirely a surprise to the market given the creditors were still not able to agree on the restructuring terms,” said Zerlina Zeng, a credit analyst at Creditsights Singapore LLC. With most assets on the mainland, “I doubt its offshore creditors would receive substantial recovery proceeds from the liquidation order,” she added.

Evergrande, which first defaulted on a dollar bond in December 2021, was for a time in the last decade the country’s largest builder by sales. The petition for liquidation was filed in June 2022 by Top Shine Global Limited of Intershore Consult (Samoa) Ltd., which was a strategic investor in the homebuilder’s online sales platform.