Indebted Chinese real estate giant Evergrande suspended trading in its shares again today Following information on the Hong Kong Stock Exchange suggesting that Its founder and chairman, Hui Ka-yan, is under house arrest, of sorts.. In a brief statement released this morning, Evergrande said securities trading would be frozen from 09:00 local time (01:00 GMT), but did not specify the reasons why. The same decision was made by real estate management subsidiary Evergrande Property Services and Evergrande New Energy Vehicles, a company dedicated to electric vehicle production, both of which are traded in the same market as its parent company.
This Wednesday, Bloomberg reported, citing unnamed sources, that Hui was “under surveillance” at a “designated” location; While this does not constitute a formal detention, it is a measure that means authorities are trying to prevent the manager from leaving the facility. Enter the country or meet other people without prior permission.
Shares in Evergrande, which filed for bankruptcy in the US in August and announced this week that it could not issue new debt after repeatedly postponing meetings with creditors that were supposed to approve its restructuring plan. It fell 18.98% on the Hong Kong Stock Exchange todayIt created even more doubt among analysts who believed that The company may soon go into liquidation. According to the accounts announced by the company this summer, the company’s net loss from the beginning of 2021 to the middle of this year is over 80 billion euros (about 84 billion dollars). At the end of June, Evergrande’s total debt was 2.39 trillion yuan (about $326,869 million).
The financial situation of many Chinese real estate companies worsened after Beijing announced in August 2020 that it was imposing restrictions on access to bank financing for developers like Evergrande who had accumulated high levels of debt and had supported their growth for years with aggressive leverage policies.
Faced with the crisis in the sector in recent months, the Government changed its stance and announced various support measures; State banks also opened multimillion-dollar credit lines to various developers.