China Evergrande’s shares will be removed from the Hong Kong stock exchange on Monday, ending more than 15 years of trading. Once worth over $50 billion, the developer’s overwhelming debt has contributed to the ongoing crisis in China’s property market.

Economic Hardship Over Prosperity

This delisting is a major turning point, linking Evergrande to economic struggle instead of growth. This change is a stark contrast to its earlier role as a symbol of China’s prosperity. Founder Hui Ka Yan has seen his wealth drop from $45 billion in 2017 to under $1 billion today. In March 2024, he received a $6.5 million fine and a lifetime ban from capital markets due to inflated revenue claims of $78 billion by Evergrande. Liquidators are now considering actions against his personal assets. When it collapsed, Evergrande was involved in about 1,300 projects across 280 cities. This widespread involvement highlights the severity of its downfall and its effects on the economy. The delisting of Evergrande is not surprising, but it confirms the serious and ongoing crisis in China’s property sector. This solidifies the ongoing negative feelings towards developers, taking away any hope for a sudden recovery. In the next few weeks, we expect increased stress on other heavily indebted developers, making it appealing to place bets against their stocks. New data shows that China’s home prices fell 9.4% year-over-year in July 2025, indicating weakness. We’re also keeping an eye on Exchange-Traded Funds (ETFs) that are tied to the Chinese real estate and banking sectors.

Impact on Global Markets

The struggles in the property sector are affecting the global economy, especially commodities like iron ore. With construction demand low, we anticipate further drops in iron ore prices, which have recently gone below $100 per tonne. This situation is more severe than the slowdown we saw in 2015, as it stems from a deep loss of confidence. We are alert for signs of trouble in industries that depend on Chinese consumer spending, such as luxury goods in Europe and car makers in Germany. Germany’s manufacturing PMI recently fell to 48.5, with businesses noting fewer orders from China as a major issue. The drop in wealth, illustrated by Hui Ka Yan’s fall from his 2017 wealth, negatively affects high-end spending. We expect more fluctuations in the Hang Seng Index due to potential unexpected responses from Beijing. Traders should consider using options strategies, like straddles, to profit from significant price changes in either direction. The CBOE China ETF Volatility Index (VXFXI) has already increased by 15% in August 2025, indicating that the market is preparing for bumpy times. Create your live VT Markets account and start trading now.

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