Evergrande to be dropped from Hang Seng China Enterprises index as it grapples with debt crisis

Hang Seng said it will delist heavily indebted Evergrande, whose share price is down 80% this year, from the Hong Kong index on December 6. ...
Evergrande skyscraper
Workers walk in front of the Evergrande headquarters in Shenzhen, southeastern China on September 26, 2021.

  • Heavily indebted developer Evergrande will be removed from Hong Kong's Hang Seng China Enterprises Index.
  • Index provider Hang Seng did not give a reason for the change, which is effective December 6.
  • Stock in the Chinese property development giant, which owes $300 billion, has fallen 80% year to date.

Embattled developer China Evergrande Group (3333.HK) will be removed from Hong Kong's Hang Seng China Enterprises Index (.HSCE), the benchmark provider said on Friday following a regular quarterly review.

The Hang Seng Indexes Company does not typically give reasons for changes to its indexes, and did not in Friday's statement. The changes will be effective December 6.

The Hang Seng China Enterprises Index is designed to reflect the performance of mainland Chinese companies listed in Hong Kong, and includes the top 50 eligible stocks by a measure of their market value.

Evergrande's shares have fallen over 80% year to date. They closed Monday down 1.8% at HK$ 2.73 ($0.35).

Shares in the cash-strapped Chinese property developer lost ground last week after the company sold its entire stake in major tv and film streaming service HengTen Networks. It said it would book a loss of HK$8.5 billion ($1.09 billion) on the sale of its 18% holding.

The Chinese real-estate giant is the world's most indebted developer, with $300 billion in liabilities. It has been holding fire-sales of its corporate assets, incurring huge losses to free up liquidity. But on Thursday, S&P Global Ratings analysts said in a report the company is highly likely to default.

Separately, Hang Seng Indexes said they had added technology firms (9618.HK) and Netease (9999.HK) to the benchmark Hang Seng.

Hang Seng Indexes is trying to include more securities in the benchmark to make it more reflective of the companies listed in Hong Kong.

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