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Trading of indebted developer Country Garden suspended in Hong Kong

Trading of indebted developer Country Garden suspended in Hong Kong

Trading in shares of Chinese property developer Country Garden was suspended Tuesday in Hong Kong, amid financial woes stemming from the ongoing Chinese housing crisis. The announcement came days after the company, which used to be one of China’s biggest developers, postponed the release of its 2023 annual results.

In a Hong Kong exchange filing Tuesday, Country Garden said, “At the request of the company, trading in the shares of the company on the stock exchange will be suspended … pending publication of the 2023 Annual Results.”

Last Thursday, the company said the delay of the financial report was due to a need to “collect more information to make appropriate accounting estimates and judgments.”

China’s housing crisis has been ongoing since 2021, after government regulatory crackdowns on developers taking out high amounts of debt spurred a liquidity crisis, which left many companies unable to pay off such debt.

Last year, overall housing sales in China declined by 6.5% from the year prior and 35.9% from the start of the crisis in 2021.

For Country Garden, the suspension of trading comes two years after the company suffered a loss of about $844 million, its first full-year loss since listing in 2007. It defaulted on offshore payments and faces a winding-up petition in Hong Kong, which could force the company to liquidate its assets.

Country Garden is one of many firms that have been affected by China’s property crisis. Other companies have had their shares suspended recently, including Modern Land, Central China Management and Ronshine China.

The crisis faced by developers has led some investors to doubt the economic future of the world’s second-largest economy. In the first two months of this year, foreign direct investment in China plummeted as investors sought to avoid risk.

Last week, Communist Party official Zhao Leji expressed confidence in China’s economy despite issues in the property sector, saying that China would be leveraging tech innovation to bolster economic growth.

Some information in this report came from Reuters and Agence France-Presse.