[Epoch Times, August 24, 2021]Evergrande Group, which is in a major debt crisis, recently reported that it “sale” the company’s headquarters in Hong Kong. The transaction was negotiated by the former chairman of Evergrande, Xu Jiayin. Affected by this news, Evergrande’s market value lost HK$32 billion a day. At present, the news has not been officially confirmed.
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On August 23, the “Economic Observer” reported that Yuexiu Group, a state-owned enterprise in Guangzhou, is negotiating with Evergrande Group to acquire Evergrande Hong Kong Headquarters.
A person close to the transaction disclosed that “the two sides did have contact and are in talks, but they have not yet been negotiated.” The person also added that Xu Jiayin personally participated in the negotiation of the sale of the property.
According to people familiar with the matter, China Evergrande plans to sell its Hong Kong headquarters building to Yuexiu Property for HK$10.5 billion, with a price reduction of more than 30%. According to reports, Evergrande had previously proposed an intention price of HK$15.6 billion.
People familiar with the matter said that Yuexiu hopes to find an entire commercial building in Hong Kong for its own use in order to cope with its business development.
However, the relevant person in charge of Yuexiu Real Estate responded to the media saying that he was “uninformed.”
Public information shows that Evergrande’s Hong Kong headquarters building is located in Wan Chai, which was purchased by China Evergrande for HK$12.5 billion (US$1.6 billion) in 2015. Currently, Yuexiu Property is headquartered in Lockhart Road, Wanchai, only a 7-minute walk from Evergrande Hong Kong Headquarters.
Public information shows that the buyer Yuexiu Real Estate Co., Ltd. is a real estate development enterprise controlled by Guangzhou Yuexiu Group Co., Ltd. “Guangzhou Yuexiu Group” is a state-owned enterprise under the management of the State-owned Assets Supervision and Administration Commission of Guangzhou Municipal Government. Some Hong Kong media analyzed that if the transaction is successful, it may mean that a state-owned enterprise is helping Evergrande.
After the news that Evergrande Group sold the Hong Kong headquarters building, the stock of Evergrande fell.
According to The Paper, as of the close of the 23rd, China Evergrande reported HK$4.31 per share, a decrease of 12.4%; Evergrande Property reported HK$5.47 per share, a decrease of 9.14%; Evergrande Auto reported HK$7.68 per share, a decrease of 26.86%.
Based on this calculation, the total market value of the three Evergrande stocks fell by approximately HK$32 billion compared with the previous trading day.
On August 19, the Central Bank of the Communist Party of China and the China Banking and Insurance Regulatory Commission interviewed the senior executives of Evergrande Group, urging them to actively resolve debt risks, not to disseminate and promptly clarify false information. After the news that Evergrande was interviewed, the stocks of Evergrande continued to decline.
Recently, the Evergrande Group, which is in a debt crisis, has continuously reported that it has sold its assets to repay its debts. Xia Haijun, vice chairman of Evergrande Group, sold the stocks of Evergrande Automobile and Evergrande Property Group Co., Ltd. on August 11 for a cash of 115 million Hong Kong dollars.
Brokerage China quoted Yan Yuejin, a well-known real estate analyst, as saying that Evergrande’s plan to sell major properties does indicate that the company’s capital pressure is relatively high. By selling assets, it can relieve the company’s capital pressure to a large extent.
Evergrande is a leading real estate company in mainland China and is accused of being too big to fail. Economist Wu Jialong told The Epoch Times that if China’s mortgage defaults and the real estate bond market default, the real estate bubble may burst and spread to financial institutions. The impact is like a domino effect. The impact is like a copy of Lehman Brothers, threatening to cause the next wave of financial tsunami.
Editor in charge: Li Bing #
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