Evergrande shares tumble to record low as debt deadline looms yet again

Shares in embattled Chinese real estate developer Evergrande plunged to their lowest price ever overnight as investors cleared out of the company over concerns it is on the brink of collapse.

Evergrande is yet again teetering on the verge of missing a 30-day grace period deadline to pay debts worth over £82m.

The downward turn is the latest in the Evergrande saga that has seen the developer fall from being China’s largest real estate company to buckling under the weight of around $300bn in debt.

Investors were spooked by the firm last Friday signalling it did not have the resources to meet a string of calls from creditors demanding to receive repayments of around $260m.

Evergrande announced on the same day it had set up a risk management committee to contain the damage of its billions of unpaid liabilities. The committee includes officials from the Chinese government.

The developer also announced it is seeking to restructure its offshore debt after recognising it is unlikely to fulfill its financial obligations. 

The announcement prompted the provincial government of the southern China province of Guangdong, where Evergrande is based, to intervene to help contain the fallout.

Conita Hung, investment strategy director at Tiger Faith Asset Management, said: “Evergrande’s been trying to sell assets to repay debt, but Friday’s statement basically says it is going to ‘surrender’ and needs help. This sends a very bad signal.”

Friday’s news prompted investors to once again sell off Evergrande, causing its share price to plummet over 19 per cent to a record low.

The potential collapse of Evergrande jolted global markets in September this year due to concerns over the financial system lacking capacity to absorb billions of dollars in losses if the developer defaulted on its liabilities.

The likelihood of offshore capital markets being hit by Evergrande going to the wall has weakened. However, the crisis has prompted Chinese regulators to crackdown on the heavily indebted real estate market, causing headaches for the world’s leading commodity firms. 

China is the globe’s biggest consumer of commodities, with its real estate sector a key generator of demand.