Recently, the news has been marked by the setbacks of Chinese real estate giant Evergrande, which faces a colossal debt of more than 300 billion euros. The situation has become so critical that the group’s boss, Xu Jiayin, has reportedly been placed under house arrest by the Chinese authorities, according to the Bloomberg agency.
The news of Xu Jiayin’s house arrest had an immediate impact on the company, with the suspension of Evergrande’s shares on the Hong Kong Stock Exchange. This suspension also affected trading in shares of the group’s subsidiaries, particularly those specializing in real estate services and the construction of electric vehicles.
Evergrande’s situation is a descent into hell for the group which was once the number one real estate company in China. The group’s problems have fueled distrust in China’s real estate sector, triggering a crisis of confidence and an economic slowdown. Even companies known to be financially strong, like Country Garden, have been affected by this crisis.
Xu Jiayin, who was once the richest man in Asia, has seen his wealth decline significantly due to Evergrande’s financial problems. The house arrest of the group’s boss is a new ordeal for the company which is already struggling to repay its creditors and restructure its debt.
This crisis in the real estate sector in China is the result of exaggerated growth and massive debt. Chinese authorities have taken steps to regulate the sector, leading to reduced access to credit for real estate businesses. This led to construction delays and a drop in buyer confidence, which impacted property prices.
The Evergrande crisis has also affected other players in the Chinese real estate sector, such as Country Garden, and has weakened smaller companies. The consequences of this crisis could be significant, with the possibility of judicial liquidations and a reduction in investments in the real estate sector.
In conclusion, the situation of Evergrande and its boss under house arrest is a striking example of the challenges facing the Chinese real estate sector. The crisis of confidence, debt problems and the regulation of the real estate market have significant consequences for companies in the sector. It remains to be seen how Evergrande and other market players will be able to overcome these difficulties and adapt to an ever-changing environment.