Evergrande shares have been suspended in Hong Kong as the company tries to raise money

Evergrande shares have been suspended in Hong Kong as the company tries to raise money
Evergrande shares have been suspended/courtesy

Crisis-hit Evergrande, a Chinese real estate conglomerate, has halted trading in its Hong Kong stock as investors await details on its restructuring plan.

The cause for the trading stop was not stated in the statement to the stock market.

Evergrande owes more than $300 billion (£222 billion) in debt and is scrambling to repay suppliers and creditors by selling assets and shares.

The corporation postponed plans to refund investors in its wealth management products last week.

Regardless of when the investment matures, Evergrande said on Friday that each investor in its wealth management program may expect to receive $1,257 in monthly principal payments for three months.

The corporation had previously refused to provide a figure and committed to reimburse 10% of the money when the product matured at the end of the month.

Evergrande said in a statement on the wealth unit’s website that the situation was “not ideal” and that it will “aggressively raise cash” and update the repayment plan in late March.

The announcement was interpreted as reflecting the troubled property developer’s growing liquidity crunch.

Evergrande missed certain interest payments on its offshore notes last week.

Local media claimed over the weekend that the company was ordered by a city administration on the Chinese resort island of Hainan on December 30 to demolish its 39 residential buildings there within 10 days because they were erected unlawfully.

Evergrande hasn’t responded to the reports yet.

Rating agencies declared the company’s $19 billion in international debts in default after it missed a payment deadline last month.

Evergrande halted its stock in early October, citing “an announcement containing inside information about a large transaction” as the reason for the measure.

At the time, there were rumors that rival real estate business Hopson Development was planning to purchase a 51 percent stake in its property services division.

Later that month, Evergrande said that the $2.6 billion (£1.9 billion) transaction had fallen through due to a lack of agreement on terms.

Evergrande’s stock dropped nearly 90% in value last year as investors were increasingly anxious about the company’s future.

Many aspects of Evergrande’s debt crisis have been shrouded in mystery for months.

However, some experts feel that this isn’t by chance; it’s exactly how Beijing wants it.

The Chinese Communist Party recognized that changing the laws to limit how much money property developers could borrow would generate big problems for Evergrande and other deeply indebted real estate corporations would be disastrous.

According to China analysts, the government sought to send a strong message that the sector’s uncontrolled expansion could not continue.

Authorities have also stated that bailing out Evergrande and its billionaire founder would be against to President Xi Jinping’s “Common Prosperity” plans, which aim to more evenly divide wealth throughout society.

Beijing, on the other hand, is naturally concerned that Evergrande’s problems do not become China’s Lehman moment, which may have ramifications for the rest of the world’s second largest economy and beyond.

As a result, Evergrande’s sluggish transformation occurs quietly behind closed doors. And, like today’s trading stop notification, there are no explanations.


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