– Trading in China Evergrande shares has been suspended
The Hong Kong Stock Exchange has suspended trading in the securities of the debt-laden Evergrande Group. According to recent media reports, investigations are ongoing against the company’s employees.
Trading in shares of troubled Chinese property group China Evergrande was suspended on Thursday after reports that its founder had been placed under police surveillance. This includes trading in the company’s Hong Kong-listed shares as well as real estate services and electric vehicle shares. Evergrande shares only resumed trading at the end of August after a 17-month suspension. The company’s founder, Hui Ka Yan, is under police surveillance, according to a Bloomberg News report. No reasons were given for this.
Reuters was initially unable to verify the report because neither Evergrande nor the police headquarters in Guangdong Province, where the real estate group is based, nor the Ministry of Security could be reached for comment. However, two insiders said that Hui stopped communicating with staff a few days ago and cannot be reached. A few days ago, several managers of Evergrande’s subsidiary Hengda were arrested.
Investigations against Hengda threaten planned debt restructuring. One of the cornerstones is replacing old debt with new bonds. Because of Hengda, Evergrande is not allowed to issue any new debt securities at the present time. Brokerage firm UOB-Kay Hian described the failure of the debt restructuring as “highly likely.” This may push the company into bankruptcy. However, there is an opportunity for restructuring under the insolvency administrator. A complete collapse could jeopardize social peace because many of the group’s housing units have already been sold but are not yet completed. The real estate company has already applied for protection from creditors in the United States of America.