Trading in shares of property developer China Evergrande suspended in Hong Kong
28 September 2023, 07:54
The chairman of the group was detained earlier this month.
Trading in shares of the heavily indebted Chinese property developer China Evergrande Group has been suspended in Hong Kong, according to a notice on the Hong Kong stock exchange.
The suspension comes after Bloomberg News reported that the chairman of Evergrande, Hui Ka Yan, had been detained earlier this month and placed under police watch.
Evergrande is the world’s most heavily indebted real estate developer and is at the centre of a property market crisis that is dragging on China’s economic growth.
The group is undergoing a restructuring plan, including offloading assets, to avoid defaulting on 340 billion (£280 billion) in debt.
Shares of Evergrande closed at 32 Hong Kong cents on Wednesday. The company had resumed trading on August 28 after a 17-month hiatus.
Trading in two other units, China Evergrande New Energy Vehicle Group and Evergrande Property Services Group, was also halted on Thursday.
Last week, Evergrande said it had to delay a proposed debt restructuring meeting with creditors as “sales of the group have not been as expected by the company”.
On Friday, China’s national financial regulator announced it had approved the takeover of the group’s life insurance arm by a new state-owned entity.
Earlier in September, police in the southern Chinese city of Shenzhen said they had detained some staff at China Evergrande Group’s wealth management unit.
Evergrande ran short of cash after Beijing tightened controls in 2020 on corporate debt that the ruling Communist Party worries is dangerously high.
Evergrande said it had more assets than debt but had trouble turning slow-selling real estate into cash to repay creditors.
A series of debt defaults in China’s sprawling property sector since 2021 has left apartment buildings half-finished and many disgruntled homebuyers.
Observers fear the real estate crisis may further slow the world’s second-largest economy and spill over globally.
In August, Evergrande applied for Chapter 15 bankruptcy protection filing in New York, which allows a US court to halt litigation and other collection efforts in the US in cross-border insolvency cases.
