China's Evergrande Crisis Is Taking Toll On Billionaires' Net Worth

A rising financial shortage at Guangzhou-based Evergrande, China's largest real estate company, triggers the fear that it could spread to the rest of the world. The company, which is on the verge of bankruptcy, has wreaked havoc on the world's wealthiest individuals, causing them to lose billions of dollars.

Evergrande, which began selling bottled water in 1996 before moving on to pig farming, currently owns China's top professional football team—Guangzhou Football Club, managed by former Italian centre back Fabio Cannavaro. It expanded into more than 250 Chinese cities, peddling home-ownership ambitions to the country's middle class, riding on a continuous property price rise in China—the key driver of the post-pandemic Chinese economic boom.

According to the latest reports, with more than $300 billion in liabilities, equivalent to 2 per cent of China's GDP, Evergrande is rushing to acquire funds to pay its numerous lenders and suppliers. It is believed that if the real-estate giant—which employs 200,000 people—goes bankrupt, it will have a significant influence on China's economy. Because China is a key commercial partner for several countries, economic issues inside the borders of the Asian country might have far-reaching consequences.

Meanwhile, Evergrande announced on 22 September that it had reached an agreement with domestic bondholders to avoid defaulting on one of its interest payments. As reported, the domestic bond is expected to be worth $35.9 million (232 million yuan).

While investors concerned about the company's debt crisis will be relieved by the latest announcement, as per the reports, the world's most indebted developer is expected to pay $83.5 million in interest on an international bond.

Evergrande's property unit Hengda said in a statement filed with the Shenzhen Stock Exchange in mainland China that it has achieved an agreement with holders of the onshore bond over repayment. But the statement did not specify how much interest would be paid or when it would be paid. The offshore bond was also not mentioned in the filing.

Billionaires Lossing Money

The world's richest 500 people lost billions in a global stock market rout sparked by concerns about Evergrande Group on 20 September. As reported, Elon Musk, Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett and other members of the world's top ten wealthiest persons witness a sudden drop in their net worth.

According to the Bloomberg Billionaires Index, Musk, who is the world's richest billionaire, had his net worth drop by $7.2 billion to $198 billion. Similarly, with a net worth of $194 billion, Amazon founder Jeff Bezos lost $5.6 billion.

The Standard and Poor's 500 or S&P 500 index, on the other hand, fell 1.7 per cent to $4,357.73, its lowest daily performance since May of this year. It fell 4.3 per cent from its 52-week high of $4,545.85 as a result of the sell-off.

Meanwhile, Hui Ka Yan, the founder and chairman of Evergrande, who was ranked 359 on the Bloomberg Billionaires Index, saw his wealth ranking fall as the company's shares sank to their lowest levels in almost 11 years. His net worth was $7.3 billion, down from a peak of $42 billion in 2017.

Some of the worst losses on Hong Kong's Hang Seng Index were driven by the city's largest property developers. Property moguls Lee Shau-Kee, Yang Huiyan, Li Ka-Shing and Henry Cheng collectively lost more than $6 billion. Additionally, Colin Huang, the founder of the e-commerce company Pinduoduo Inc., has lost more money than anyone else in China this year, including $2.3 billion on 20 September.

The Financial Express reported that other names in the list of unfortunate billionaires include, Louis Vuitton SE group head Bernard Arnault with $157 billion (down $2 billion), Microsoft co-founder Bill Gates with $149 billion (down $1.94 billion) and Facebook founder Mark Zuckerberg with $132 billion (down $3.27 billion) net worth.

In addition, Larry Page and Sergey Brin, co-founders of Google, were ranked sixth ($124 billion, down $1.9 billion) and seventh ($119 billion, down $1.8 billion) on the Bloomberg Billionaire Index, respectively.

Steve Ballmer, the former CEO of Microsoft, was ranked eighth on the list, with a net worth of $105 billion (down $1.9 billion). Oracle Corporation's Larry Ellison was ranked ninth with a total net worth of $100 billion (down $764 million), and multibillionaire investor Warren Buffet was ranked tenth with a total net worth of $100 billion (down $701 million).