Evergrande shares halted after 90% slide as chairman under surveillance

The trading of debt-riddled property behemoth Evergrande has been halted on the stock market exactly a month since it relisted.

On Thursday afternoon AEST, the Chinese property developer entered into a trading halt, according to the Hong Kong stock exchange.

At the time of the close, its shares were trading as low as 32 Hong Kong cents (A$0.064).

It came after investors were spooked upon hearing the news that the chairman of Evergrande has been placed under surveillance.

This is the second time in as many years that Evergrande’s public listing has been abruptly halted.

Evergrande has been caught in a “death spiral” since 2021 with $US300 ($A468) billion in liabilities and for more than two years it has been on the brink of collapse, pausing its trading indefinitely while trying to come up with a solution.

After 18 months of suspension, it went back on the stock market last month, on August 28. But since then its market capitalisation has slid by nearly 90 per cent over those 31 days.

Earlier this month, the Chinese Communist Party began pursuing the company’s big players with allegations of fraud.

Wire service Reuters reported that China’s securities regulator was investigating Evergrande over suspected violations of information disclosure.

Evergrande’s wealth management unit in Shenzhen, southern China, was raided over the weekend. Several of its staff have been detained on suspicion of “illegal fundraising”.

“Recently, public security organs took criminal compulsory measures against (general manager) Du (Liang) and other suspected criminals at Evergrande Financial Wealth Management Co,” Shenzhen Nanshan District Police Bureau said on Saturday.

No further details were provided.

Late on Wednesday local time, Evergrande reported on its performance for the past six months ending June 2023 and suffice to say the results were dire.

It made a loss of 33 billion yuan (A$6.51 billion) and had an operating loss of 11.72 billion yuan (A$2.52 billion).

The company made another performance announcement in July which had been delayed for years, revealing it had racked up

In July, the company posted a combined net loss of A$121 billion for the years of 2021.

On Monday, Evergrande’s shares slid a whopping 25 per cent in the space of one day.

Then the property giant said it would delay a debt restructuring meeting due Monday, causing its worth to plunge drastically.

Since its listing last month, its shares have slid by around 90 per cent, rendering the once massive property player as merely a penny stock.

On the Friday before the meeting was supposed to take place, Evergrande filed a document to the Hong Kong exchange outlining that its debt restructuring plan had to change as their re-entry into the stock market had not gone as planned.

“The sales of the Group has not been as expected by the company” since its March debt restructuring announcement, Evergrande wrote.

As a result, Evergrande said it “considers it necessary to reassess the terms of the proposed restructuring to meet the company’s objective situation and the demand of the creditors”.

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