Trading In Evergrande Shares Suspended In HK

Trading in shares of China Evergrande Group was halted this week following reports that its chairman had been placed under police surveillance.

The suspension of trading for Evergrande shares and its two subsidiaries occurred one day after a report that Chairman Hui Ka Yan had been taken into police custody earlier in the month came out. I Photo: Wpcpey Wikimedia Commons

This development raised concerns about the company's future as the risks of liquidation continued to grow, as reported by Scott Murdoch and Ziyi Tang for Reuters.

With over $300 billion in liabilities, roughly equivalent to Finland's gross domestic product (GDP), Evergrande has become a symbol of the debt crisis in China's property sector, which accounts for approximately a quarter of the country's economy.

The suspension of trading for Evergrande shares and its two subsidiaries occurred one day after Bloomberg reported that Chairman Hui Ka Yan had been taken into police custody earlier in the month and was now under monitoring at a designated location.

The reasons for Hui's police surveillance remain unclear, but it may indicate certain negotiations requested by the government.

This recent development has disrupted hopes of a successful restructuring," said Gary Ng, Asia Pacific senior economist at Natixis.

"No developer is too big to fail in China, and therefore it is hard to imagine a full bailout. However, in terms of stability, it is possible to expect increased government influence in various ways," Ng added.

The Bloomberg report mentioned that the reasons for Hui's surveillance were not clear. Evergrande had been working to secure creditor approval for the restructuring of its offshore debt.

However, the process became more complicated this week after Evergrande announced its inability to issue new debt due to an investigation into its primary unit in China.

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