Trading in shares of several large Chinese developers has been stopped in Hong Kong.
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Trading in shares of several Chinese real estate developers on the Hong Kong Stock Exchange was suspended today, as all of them were unable to submit their financial statements for 2023 on time.
Among the companies whose shares stopped trading were such large developers as Country Garden, Central China Management and Modern Land, writes The Wall Street Journal.
Country Garden has been in dire financial straits since last year. The company’s debts, according to the latest estimates, amounted to $187 billion, and for the first half of 2023 the developer’s net loss reached $7 billion. Last October, Country Garden made its first default on dollar bonds. In February, one of the company’s creditors, Ever Credit Limited, filed a lawsuit to the High Court of Hong Kong demanding the liquidation of the developer for non-payment of debts on a loan of 1.6 billion Hong Kong dollars (about $204 million). In March, Country Garden defaulted again, this time on bonds denominated in yuan, and at the end of the month it notified the Hong Kong Exchange that it would indefinitely postpone the publication of its financial report for 2023.
Central China last week said it was delaying the publication of its 2023 financial statements because auditor KPMG was unable to complete a review of the developer’s financials on time. The auditor requested additional information about loans amounting to 750 million yuan ($103.7 million). The company said it provided additional information to the auditor.
Two more developers were unable to submit financial reports on time due to disagreements with auditors over the amount of their fees for work done.
The suspension of trading in developer shares is another sign of the protracted crisis in the Chinese real estate sector. It has been in a state of crisis since the fall of 2021, when it became known about the serious financial problems of the China Evergrande Group holding. Its assets were then estimated at $240 billion, and its debts at more than $300 billion. As a result, in January of this year, the Hong Kong court decided to liquidation once China’s largest developer. In mid-March, the China Securities Regulatory Commission accused the bankrupt real estate developer of deliberately and systematically inflating revenue figures. In total, according to the regulator’s estimates, the company defrauded investors of 564 billion yuan ($78 billion) – this is one of the largest frauds in Chinese history.
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