Shares of China Evergrande Group, the embattled developer, plummeted 25% on Monday following the detention of some staff members at its wealth management unit. This development suggests a new investigation that could further worsen the company’s already troubled situation. Evergrande, which is the most indebted property developer in the world, is at the center of a crisis in China’s real estate sector. This crisis has led to a series of defaults since late 2021, causing global market turmoil and concerns about contagion. The company’s stock trading was suspended for 17 months until August 28.
During protests at Evergrande’s Shenzhen headquarters in 2021, Du Liang was identified as the general manager and legal representative of the company’s wealth management division. In a statement on social media, the police in Shenzhen announced that they had taken criminal measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co.
It should be noted that RushHourDaily was unable to confirm whether Du was among those detained, and the police statement did not provide details about the number of people detained, the charges, or the date of their arrest. Evergrande has not yet commented on the police action.
As a result of these developments, the company’s stock fell by as much as 25% in early morning trade, reaching its lowest point in two weeks. However, it later recovered slightly, with an 11% decline by 0200 GMT, compared to a 0.9% drop in the broader Hang Seng Index.
In the previous month, Evergrande reported a net loss of 33 billion yuan ($4.5 billion) for the first half of the year, compared to a loss of 66.4 billion yuan in the same period the previous year. Additionally, the company recently announced a delay in making a decision on offshore debt restructuring, pushing the deadline to next month to give debt holders more time to consider the restructuring plan.
In conclusion, Evergrande’s stock took a significant hit following the detention of staff members at its wealth management unit. The company’s ongoing financial crisis and the broader real estate sector turmoil in China have raised concerns about the potential impact on global markets.
