Evergrande trading suspended as fears mount over indebted Chinese developer

Author
Daily Telegraph UK,
Publish Date
Tue, 4 Jan 2022, 12:00PM
Hui Ka Yan, Evergrande's founder and chairman, is said to have already put about US$1.1 billion of his own money into propping up the business. Photo / Bloomberg
Hui Ka Yan, Evergrande's founder and chairman, is said to have already put about US$1.1 billion of his own money into propping up the business. Photo / Bloomberg

Evergrande trading suspended as fears mount over indebted Chinese developer

Author
Daily Telegraph UK,
Publish Date
Tue, 4 Jan 2022, 12:00PM

Shares in Evergrande were suspended on Monday amid increasing uncertainty about the stability of the debt-ridden Chinese property behemoth. 

Evergrande said that trading in Hong Kong had been halted ahead of the release of "inside information", but declined to give further details. 

It came after the company, which is struggling under the weight of US$300 billion (£222bn) of loans, missed a debt payment last week. Chinese media reports over the weekend said Evergrande had been ordered to demolish an illegally-built development in Hainan, a southern island region in China. 

The company has also walked back plans to repay investors who bought into a wealth management product. 

Evergrande became China's second-biggest developer, with hundreds of property projects across dozens of cities, following a huge binge on debt. 

However, it has been hit by Beijing-imposed limits on borrowing that have left it teetering on the brink of collapse and sparked fears of a sudden crash in Chinese real estate. 

Shares fell by 90 per cent last year, and last month the ratings agency Fitch declared that Evergrande had officially defaulted on its debts after missing a 30-day grace period to repay more than US$1b. 

Last Tuesday it missed a deadline for another US$255 million of payments, although the grace period for this debt has not yet expired. 

The Chinese news outlet Cailian reported over the weekend that Evergrande had been forced to demolish 39 buildings in the city of Danzhou within 10 days, because permits to build them had been obtained illegally. It said a notice had been sent to the company by local officials. 

Evergrande had been expected to restructure its debt under the eye of Communist Party authorities, which are hoping to prevent the company's troubles from spilling over into the wider property market. 

It has been selling assets and shares in an effort to raise cash. Hui Ka Yan, Evergrande's founder and chairman, is said to have already put about US$1.1b of his own money into propping up the business. 

- by James Titcomb, Daily Telegraph UK