China’s Shimao, the latest victim in the real estate crisis

Shares of the Chinese real estate giant Shimao dropped to a record low on Monday on the Hong Kong stock exchange after it was announced that one of the country’s largest banks had filed for liquidation, according to BFM TV.

The Chinese government is trying to alleviate the current real estate crisis, which is causing concern in the world’s second-largest economy. Some developers are on the brink of bankruptcy, and falling prices are discouraging Chinese investment in properties, all against the backdrop of economic slowdown.

In a statement released Monday on the Hong Kong stock exchange, where it is listed, Shimao stated that the state-owned company China Construction Bank had filed for liquidation on Friday “in connection with a financial obligation” of approximately 200 million dollars (185 million euros).

As a result of this situation, the share price fell by over 14%, reaching a new historic low of just 0.39 Hong Kong dollars (0.05 euros).

Debt restructuring plan

Shimao is a major player in the Chinese real estate market, owning residential buildings, office towers, hotels, and shops in many major cities in China, such as Shanghai and Beijing.

In its press release, the group promised to “vigorously oppose” this liquidation request, continuing to work on implementing a debt restructuring plan.

In January, a court in Hong Kong ordered the liquidation of Evergrande, another Chinese real estate giant that fell out of favor and whose problems regularly made headlines.

At the end of March, the listing of Country Garden, another troubled Chinese real estate group, was suspended on the Hong Kong stock exchange after the company postponed the publication of its results.