Country Garden shares jump 17% on trading resumption amid debt restructuring hopes
Stock jumps as much as 30 per cent in Hong Kong after a nine-month trading suspension
Shares of Country Garden Holdings surged by as much as 30 per cent as the troubled Chinese property developer resumed trading after a nine-month suspension amid efforts to reorganise some of its US$155 billion in liabilities.
The stock jumped 17.5 per cent to close at HK$0.57 in Hong Kong on Tuesday, after earlier rising to as high as HK$0.63. The company has lost 97 per cent of its market value from the peak in 2018.
Like many of China’s top real estate developers, the firm has been struggling with declining sales after the Covid-19 outbreak, compounded by a liquidity crunch after Beijing launched its “three red lines” policy in 2020 to curb excessive borrowing among the weakest industry players.
“The market likely believes that there is a chance for its restructuring to succeed”, hence the stock jump, said Raymond Cheng, a managing director at CGS International Securities in Hong Kong. “I personally remain cautious, as the progress of the restructuring won’t be that simple and there are still many challenges ahead.”
Country Garden had 1.13 trillion yuan (US$155 billion) in total liabilities on June 30 last year, including 250 billion yuan of bonds and bank borrowings. Earlier this month, it proposed restructuring terms to reduce its offshore debt by up to US$11.6 billion. The firm reported a record 178.4 billion yuan loss for 2023, according to accounts published last week.
