Evergrande Group Suspended from Hong Kong Stock Market Trading...Rumors of Affiliate Stake Sales

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Shares of China’s real estate developer Evergrande Group, engulfed in bankruptcy rumors, were suspended from trading on the Hong Kong stock market on the 4th.

According to Bloomberg and other sources, trading of Evergrande Group and Evergrande Property Services, Evergrande’s real estate management business unit, was temporarily halted on the Hong Kong stock exchange. The reason has not yet been disclosed.

The economic media outlet Caixin, citing anonymous sources, reported that another real estate company, Hesheng Chuangzan, plans to acquire a 51% stake in Evergrande Property Services to secure management rights, with the transaction amount expected to exceed HKD 40 billion (approximately KRW 6 trillion). Shares of Hesheng Chuangzan, listed in Hong Kong, were also suspended from trading on the same day.

With Evergrande’s debt known to exceed USD 300 billion (approximately KRW 356 trillion), its stock price has fallen about 80% since the beginning of this year. Additionally, the value of Evergrande’s bonds has dropped to a level that requires preparation for default, and Evergrande is pushing asset sales to secure cash.

Evergrande reportedly failed to properly pay interest on dollar bonds due on the 23rd and 29th of last month, and another bond’s effective maturity occurred on this day. The maturity of USD 260 million (approximately KRW 300 billion) in dollar bonds issued by Jixiang Enterprise came due on the 3rd, and Evergrande Group is included as a bond collateral provider.

However, shares of Evergrande’s electric vehicle subsidiary, Evergrande New Energy Vehicle Group (Evergrande Health), were not suspended from trading on this day, showing high volatility by dropping about 6% in early trading before turning positive. Amid spreading anxiety, the Hong Kong Hang Seng Index fell more than 2%.

Bloomberg also reported that while the Chinese government is trying to prevent the Evergrande crisis from spreading, it is unlikely to bail out Evergrande.

Last week, Chinese authorities urged financial institutions to ease credit to support homebuyers and the real estate industry, and the People’s Bank of China took measures such as supplying liquidity to the market, but there are no signs of direct bailout support for Evergrande.

James Fung of Poseidon Capital Group said in a Bloomberg interview that Chinese authorities will prioritize rescuing construction workers, homebuyers, partners, and lenders in that order, and that offshore bondholders are expected to suffer significant losses.

This content was produced with the assistance of AI translation services.