China Ever Grande's Volatile Stock Market Journey Since Trading Resumed Three Weeks Ago

19 Sep, 2023

China Ever Grande's Volatile Stock Market Journey Since Trading Resumed Three Weeks Ago

The tumultuous journey of troubled Chinese real estate giant Evergrande has likely left investors restless. Since resuming trading on August 28 after a lengthy suspension, Evergrande's stock has experienced significant ups and downs.

On Monday, shares of China Evergrande Group took a steep 25% nosedive in early trading following news that the police in Shenzhen, a southern city in China, had detained some individuals from its wealth management unit. According to an official WeChat account post by authorities on Saturday, they had recently apprehended staff, including one individual identified by the family name Du, as translated by Insider. The announcement did not provide details about the number of detained staff or the reasons behind their detention, nor did it provide additional information about Du.

While Evergrande's shares did recover some of their losses during Monday's trading session, they remain 63% lower than their last trading price of 1.65 Hong Kong dollars (equivalent to 21 cents apiece) before the 17-month suspension that began in March 2022. The stock's price has exhibited significant volatility since trading resumed.

On August 28, the first day of trading after the suspension, Evergrande's shares plummeted by 87%, relegating the company to penny stock status. Just over a week later, on September 6, Evergrande shares rebounded by 82%, fueled by news that Beijing was considering measures to support China's struggling property sector.

Evergrande's current market capitalization stands at about 8.2 billion Hong Kong dollars, marking a dramatic decline from its peak value of nearly 420 billion Hong Kong dollars in 2017. Once the second-largest developer in China, Evergrande encountered a liquidity crisis in 2021, triggering wider concerns about the country's real estate sector—a sector that contributes up to 30% of China's GDP.

When its troubles began, Evergrande held liabilities amounting to $300 billion, which subsequently ballooned to approximately $340 billion by the end of 2022. The company filed for bankruptcy protection in the United States on August 17.

China is endeavoring to revive its property sector by stimulating consumer demand. However, experts have noted that consumers are unlikely to rush for new apartments given the record-high youth unemployment rate and slower economic growth in the country.

As of the latest update, China Evergrande shares on the Hong Kong Exchange were trading 1.6% lower at 62 Hong Kong cents. Neither China Evergrande nor the Shenzhen Nanshan District Police Bureau immediately responded to Insider's requests for comment.