China’s Evergrande resumes Hong Kong trading
BI Desk || BusinessInsider
Shares in Chinese property giant Evergrande soared as trading resumed on Tuesday, following a suspension last week when the heavily indebted company announced its boss was under criminal investigation.
In early trading on the Hong Kong Stock Exchange, prices jumped more than 60 percent before dropping to ten percent and then rising again, reports BSS/AFP.
The resumption follows an application notice filed late Monday, though there was no such request for the firm's electric vehicle unit.
A separate statement said trading for Evergrande Property Services would also re-start at 9 am (0100 GMT) Tuesday.
Evergrande has become a symbol of China's ballooning property-sector crisis, which has seen several high-profile firms engulfed in a sea of debt, fuelling fears about the country's wider economy and a possible global spillover.
Media reported last Wednesday that Evergrande boss Xu Jiayin was being held by police, in the latest twist for the property behemoth.
The firm then confirmed Thursday that Xu was suspected of "illegal crimes" following the suspension of its shares from trading.
No specific reason was given for the decision to suspend trading, which also affected the company's property services and electric vehicle units.
Evergrande estimated it had debts of $328 billion at the end of June.
The company said last month it was unable to issue new debt because its subsidiary, Hengda Real Estate Group, was being investigated and key meetings planned for debt restructuring were shelved.
The firm said it was "necessary to reassess the terms" of the plan in order to suit the "objective situation and the demand of the creditors".
Its property arm missed a key bond payment last week, and Chinese financial website Caixin reported that former executives had been detained.
The crisis has deepened a broader slowdown in the world's second-largest economy.
China's property sector has long been a pillar of growth -- along with construction it accounts for about a quarter of GDP -- and it experienced a dazzling boom in recent decades.
However, the massive debt accrued by its biggest players has been seen by Beijing as an unacceptable risk for China's financial system and overall economic health.
Policymakers have come under intense pressure in recent months to unveil measures to support the economy, particularly the property sector.
But they are not keen on the type of bonanza unveiled in 2008 during the financial crisis, meaning the government could struggle to hit its growth target of around five percent for this year.
That would represent one of its worst performances in decades, excluding during the pandemic.