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Shares of China’s troubled Country Garden Holdings Co. will be dropped from Hong Kong’s Hang Seng Index, the stock index compiler announced Friday.
The property developer’s shares
2007,
have tumbled 71% this year, with more than 50% of that move coming in the most recent quarter amid a crisis for the indebted real-estate industry and difficulties for China in restarting its economy after COVID lockdowns.
China’s second-largest developer, China Evergrande Group
EGRNF,
filed for Chapter 15 bankruptcy protection in New York late Thursday.
Read: China Evergrande collapse shows need for $1 trillion Beijing rescue plan, says Clocktower strategist
The Hang Seng index itself has lost more than 10% in August and is heading for its worst monthly performance since October 2022, as the developer’s woes have weighed on the index. Country Garden failed to make bondholder payments and suspended trading for bonds, as it warned of a loss of up to RMB55 billion ($7.62 billion) for the first half of the year. Moody’s Investors Service cut its rating further into junk-bond territory.
Country Garden will be replaced by China vaccine maker Sinopharm Group
1099,
while Country Garden Services Holdings Co.
6098,
will be removed from the Hang Seng Enterprises Index, to be replaced by travel services provider Trip.com Group
9961,
TCOM,
All changes will take place as of Sept. 4, the index provider said.
Sister companies Country Garden Services and Country Garden are both controlled by billionaire Yang Huiyan. Her father Yeung Kwok Keung co-founded Country Garden in 1992.
A government spokesperson cited by the Associated Press said Tuesday that regulators were working to right debt issues and risks were “expected to be gradually resolved.”
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