Country Garden Holdings Co formerly, which was once China’s largest developer by sales, became a Hong Kong penny stock in a stance of increasing investigation and analysis of its operations and growing liquidity issues.
In the early morning of 11 August, the company stock fell by 5.8% to HK$0.98, on its way to close below HK$1 for the first time ever in the company’s history. It has reduced to 70% from its January peak, the Hang Seng Index’s poorest index over this period. This reduction also reduced the company’s market value to just $3.5 billion from a record high of around $50 billion in fiscal 2018.
Country Garden’s fall from the top draws attention to just how much the continuous fall in real estate prices is reflecting on some of China’s most powerful private builders. The Foshan-based developer, who was once looked upon as immune to economic decline, has become a point of reference for financial plague in an industry that contributed to around a quarter of the country’s gross domestic product.
Concerns regarding a debt crisis rose after shareholders of Country Garden dollar bonds mentioned they had yet to receive the coupon payments which were actually due on 7 August. This will place the company on the way to its first public default if it does not make payments within a 30-day grace period.