Evergrande’s Delisting Marks an End, But China’s Property Stocks See a New Beginning on Shanghai Easing

TradingKey - On Monday, August 25, Chinese property stocks witnessed a dramatic day: Evergrande Group, once China’s largest real estate developer, was delisted from the Hong Kong stock exchange, while onshore property stocks surged on news of new easing measures in Shanghai’s housing market. Vanke saw its A-shares hit the daily trading limit, as its latest financial report showed easing debt pressures.

After a five-year battle with debt, Evergrande, once valued at over $50 billion, was officially delisted in Hong Kong on Monday, ending more than 15 years of stock trading.

The BBC reported that this marks a grim milestone for China’s former top property developer, noting that other major Chinese real estate firms — including China South City Holdings and Country Garden — still face significant challenges.

Although Chinese authorities have introduced multiple measures to stabilize the property market and support the broader economy, they have not directly bailed out developers. This cautious approach — aimed at avoiding moral hazard in a highly leveraged sector — has left many analysts uncertain about when the real estate crisis will end.

However, the property sector has recently seen a wave of favorable policy developments, rekindling market hopes for a recovery.

On Monday, Vanke’s A-shares closed up 9.15%, while its Hong Kong-listed shares rose 9.86%, leading a broad rally in mainland property stocks. Sunac China gained over 6%, Longfor Group over 5%, and Yuexiu Property over 4%.

In contrast to Evergrande’s deepening debt crisis, Vanke reported encouraging progress in debt resolution in its latest interim financial report. As of the end of June, Vanke’s asset-liability ratio dropped 0.6 percentage points from year-end to 73.1%. The company secured support from various financial institutions, with borrowing rates and collateral ratios better than market norms.

Vanke said it has clear confidence in managing upcoming debt maturities, relying not only on external support but also on three internal strategies: preserving operating cash flow, unlocking asset value, and stabilizing and securing incremental financing.

Huatai Securities noted that Vanke has already passed the first half of its 2025 debt peak, and with policy support and state-owned capital backing, it is well-positioned for a smooth transition.

The immediate catalyst for Monday’s rally was a new round of property market easing policies introduced in Shanghai, including:

• Easing home purchase restrictions
• Optimizing housing provident fund policies
• Improving personal housing credit
• Refining personal property tax policies

The new rules state that eligible households can buy homes without unit limits in the outer suburbs.

Morningstar analysts said Shanghai’s easing will definitely be an incremental positive, expecting over half of the city’s home sales to come from suburban areas.

Last week, multiple cities introduced new housing provident fund policies, contributing to an optimistic trend: new home sales rose week-on-week, while second-hand home sales increased both month-on-month and year-on-year.