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Evergrande Chairman Under Surveillance; Shares Suspended

Trading of China Evergrande Group’s shares has been suspended by the Hong Kong stock exchange. This suspension follows reports that the chairman of the embattled Chinese real estate developer is under surveillance, adding to the ongoing uncertainty surrounding the company. Evergrande’s shares last traded at 32 Hong Kong cents before the suspension.

This is not the first time Evergrande’s shares have faced suspension; trading was halted in March of the previous year and resumed only in late August after a 17-month hiatus. The company has been grappling with a massive debt crisis that has sent shockwaves through China’s real estate sector and financial markets.

Evergrande recently reported a substantial loss of 33 billion yuan ($4.15 billion) for the first half of the year, with an operating loss of 11.72 billion yuan. In July, the company disclosed a combined net loss of $81 billion for 2021 and 2022, a stark contrast to its net profit of 8.1 billion yuan in 2020.

The company’s debt restructuring efforts have faced challenges, leading to delays in meetings with creditors. Evergrande cited lower-than-expected sales as a reason for reevaluating the terms of its proposed restructuring.

Additionally, Evergrande’s subsidiary, Hengda Real Estate, is under investigation by Chinese securities regulators for suspected information disclosure violations. This investigation has hindered the company’s ability to issue new notes under its debt restructuring plan.

The situation has escalated with police detaining some staff at Evergrande’s wealth management unit and the company seeking Chapter 15 bankruptcy protection in a U.S. court in August. Chapter 15 allows a U.S. bankruptcy court to intervene in cross-border insolvency cases involving foreign companies undergoing restructuring.

Evergrande’s ongoing financial turmoil continues to pose challenges to China’s financial stability, property market, and global investors with exposure to the company.