Chinese property stocks slide as Country Garden faces liquidation bid

investing.com:

Investing.com-- Hong Kong-listed Chinese property stocks fell on Wednesday, coming under pressure from renewed concerns over a real estate meltdown after Country Garden (HK:2007) was slapped with a liquidation petition. 

The embattled developer was the worst performer among its peers, sliding 11% and further into penny stock territory after Ever Credit Ltd filed a liquidation petition against the firm over its non-payment of a HK$1.6 billion ($200 million) loan.

Other property developers also fell, with Sunac China Holdings Ltd (HK:1918), Longfor Properties Co Ltd (HK:0960) and Logan Property Holdings Co Ltd (HK:3380) falling between 3% and 6%. The broader Hang Seng index fell 0.5%, dragged lower largely by losses in the property sector.

Country Garden Services Holdings Co Ltd (HK:6098)- a unit of the beleaguered developer- was the worst performer on the Hang Seng with a 4.6% loss.

Wednesday’s liquidation petition puts Country Garden- once China’s biggest property developer- at the heart of a deepening crisis in the country’s real estate sector. 

The sector accounts for roughly a quarter of overall Chinese economic growth, with investors fearing that any bankruptcies in the sector could spill over into the broader economy.

China Evergrande Group (HK:3333), whose default had kicked off China’s property woes in 2021, was recently ordered to wind up by a Hong Kong court. The firm now faces a challenging and complicated debt restructuring process with its creditors.

Country Garden is also engaged in talks with its creditors, although any potential liquidation presents a major hurdle to the firm.