Hong Kong Orders Evergrande Liquidation

A Hong Kong court ordered the liquidation of China's property giant Evergrande, but the firm said it would continue to operate in a case that has become a symbol of the nation's deepening economic woes.

Once China's biggest real estate firm, its astronomical debt of more than $300 billion had become emblematic of a years-long crisis in the country's property market that had reverberated throughout the world's second-largest economy.

The order kickstarts a long process that should see Evergrande's offshore assets liquidated and its management replaced, after the company failed to develop a working restructuring plan.

The company's executive director vowed the Hong Kong court's decision would not impact its operations domestically, while analysts said the ruling would further erode foreign investor confidence in China.

"Given the obvious lack of progress on the part of the company in putting forward a viable restructuring proposal and the insolvency of the company... I consider that it is appropriate for the court to make a winding up order against the company and I so order," High Court judge Linda Chan said.

Chan is expected to hand down her detailed reasons for the winding-up order and will handle the matter of appointing a liquidator.

Shares in Evergrande plunged 20.87 percent to HK$0.16 in Hong Kong following the ruling, before the stock exchange halted trading.

Trading was also halted in Evergrande's electric vehicle subsidiary. 

However, the announcement had little effect on wider stock markets, with Hong Kong and Shanghai both up at the break.

The demise of Evergrande, which first defaulted on a debt payment in 2021 and declared bankruptcy in the United States this year, has been closely watched as it was once a pillar of China's economy.

China's construction and property sector once accounted for around a quarter of the nation's gross domestic product.