Hong Kong Stock Exchange Suspends Trading in Evergrande Group Shares
In the early hours of Thursday, the Hong Kong Stock Exchange announced the suspension of trading in the shares of the Chinese real estate giant, Evergrande Group, as well as all other subsidiaries of the group, until further notice.
Investigation of Founder and Chairman
This decision to suspend trading in Evergrande’s stocks comes in the wake of recent reports that Chinese authorities have placed the founder and chairman of Evergrande, Xu Jiayin, under police investigation. The suspension of trading sends shockwaves through the financial markets, as Evergrande is one of China’s largest property developers and has significant debt obligations.
Suspension Details
In a press statement released by the Hong Kong Stock Exchange, regulators declared the suspension of trading in the stocks of Evergrande, Evergrande Real Estate, and Evergrande New Energy Vehicle Group.
Background on Evergrande Group
Evergrande Group, founded in 1996 in the British Virgin Islands and headquartered in Nanshan, Shenzhen, Guangdong Province, is the second-largest real estate development company in China in terms of sales. It primarily sells apartments to high and middle-income residents. In 2018, Evergrande briefly became the world’s most valuable real estate company by market capitalization. However, by 2021, it faced severe financial troubles, and the crisis in the Chinese real estate sector that began in 2020 has continued to linger.
Market Impact
Regarding trading activities, Evergrande’s shares listed on the Frankfurt Stock Exchange fell by approximately 16.3%, reaching 0.04 euros. This followed a steep decline in its Hong Kong-listed shares before the suspension, where they dropped by 18.99% to 0.320 Hong Kong dollars.
Broader Concerns
The situation with Evergrande has raised concerns not only about the company’s financial stability but also its potential impact on the broader Chinese and global financial markets. Investors and analysts are closely monitoring developments, and the actions taken by Chinese authorities will play a critical role in determining the future of the company and the repercussions on the real estate sector and financial stability in China.
