The delicate situation of the Chinese giant Evergrande worsens after the house arrest of its president, Hui Ka Yan, was revealed, which has led to the suspension of trading in the shares of the real estate developer and two of its subsidiaries on the Hong Stock Exchange. Kong. This new episode further complicates the group's plans to restructure its international debt and comes a few days after the developer reported that it could not issue new promissory notes because its main subsidiary in China, Hengda Real Estate, was under investigation.
Evergrande shares closed yesterday with a decline of 18.99% on the Hang Seng Index in Hong Kong, down to 0.32 Hong Kong dollars (0.039 euros) per share. The value of its shares has plummeted 81% since trading resumed at the end of August, after 17 months of suspension.
At the moment the reasons for the house arrest of the president of the real estate group have not been revealed, although he has not been officially detained nor have any charges been brought against him. The move comes after several Evergrande Wealth employees were detained last week. Despite this, the company assured that the arrests "would not affect its operations."
According to the police in Shenzhen, in the southern province of Guangdong and where the real estate group is based, among those detained was a person surnamed Du, which could refer to Du Liang, CEO of Evergrande Wealth. The arrest of the workers of Evergrande Wealth came two weeks after the group again defaulted on payments on its investment products. However, the police asked the population to report suspicions of fraud through the internet, telephone, messages or email.
With debt of more than $300 billion, Evergrande has become the epitome of the debt crisis in the Chinese real estate sector, which represents about a quarter of the economy. The company has been working to obtain creditor approval for the restructuring of its international debt. According to some analysts, the plan seems doomed to failure and increases the risks of liquidation of the company. Reuters reported on Tuesday that a major group of Evergrande's international creditors planned to join a court petition for liquidation filed against the developer if it did not present a new debt renewal plan before the end of October.
