Regulators warn of the risks to the nation’s wider financial system
The Evergrande share price has dived by nearly 20% on Monday, reaching its lowest point in over 11 years.
Investors are increasingly showing concern over the businesses’ future prospects as the deadline of its debt obligations fast approaches.
At midday, shares in Evergrande were as low as HK$2.06, its lowest since May 2010.
China‘s second-largest property developer has been trying to figure out a way to pay its numerous lenders, investors and suppliers, as regulators have warned of the risks to the nation’s wider financial system if is not able to meet its $305bn liabilities.
Hong Kong’s stock market dipped on Monday and even spread to Europe as the growing liquidity crisis at Evergrande appears to be spreading to other sectors.
Property firms in China and Hong Kong were among those seeing the biggest falls.
Hong Kong’s Hang Seng index was down by 3.5%, meaning the benchmark is down by almost 12% this year.
“Evergrande is just the tip of the iceberg,” said Louis Tse, managing director at Wealthy Securities, a Hong Kong-based brokerage.
“That affects the banks as well — if you have lower property prices what happens to their mortgages?” Tse said. “It has a chain effect.”