Shock twist in Evergrande crisis after mysterious trading halt revealed
Evergrande sparked global panic with a drastic and unexpected move this week – but now, there’s been a new twist in the saga.
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Ailing Chinese property titan Evergrande has stunned market watchers with a surprise rebound within hours of a shock trading halt.
The world’s most indebted real estate company – which has racked up staggering debts of around $A408 billion – made headlines on Monday after unexpectedly announcing its shares would be suspended from trading.
No explanation for the halt was given by the firm, which has been teetering on the brink of collapse for months on end.
It marked the second time in just three months that Evergrande’s shares have been suspended.
The announcement came soon after local media began reporting the company would be forced to demolish 39 luxury apartment buildings in a development in Hainan within 10 days after they were deemed to be “illegal”.
Chinese media reported that a document issued by the Danzhou government on December 30 claimed the buildings – part of the Ocean Flower Island project – would have to be knocked down after an illegally obtained permit for the construction of the buildings had been revoked.
It is understood the apartments are worth an estimated 7.7 billion yuan ($A1.7 billion).
The halt on the Hong Kong stock exchange also came amid reports Evergrande had failed to make repayments on some of its debt recently, reigniting fears of a default.
But despite the trading halt and the devastating demolition order, Evergrande has made a surprising resurgence, with shares jumping a whopping 3.1 per cent – to $HK1.64 ($A0.29) – in the wake of the pause, which lifted on Tuesday.
The company also attempted to calm panicked investors concerned by the news of the looming demolition in a statement posted to the Hong Kong stock exchange, stressing it would “actively communicate” with the Danzhou Comprehensive Administrative Law Enforcement Bureau regarding the ruling.
“The decision is related only to 39 buildings on the land plot 2-14-1 located on No. 2 Island, and does not involve other plots of land of the Ocean Flower Island project,” the statement reads.
“The company will actively communicate with the authority in accordance with the guidance of the decision letter and resolve the issue properly.”
Evergrande also touched on the ongoing debt crisis.
“With regard to the company’s current liquidity situation, the company will continue to actively maintain communication with creditors, strive to resolve risks and safeguard the legitimate rights and interests of all parties,” the statement continued.
The unexpected rally comes after Evergrande last week raised hopes after telling investors it would be able to repay some debts as well as deliver tens of thousands of units in January, after insisting for months it would finish projects as planned despite the company’s many woes.
The local government of Guangdong – where Evergrande is headquartered – is now overseeing the company’s debt restructuring process.
Originally published as Shock twist in Evergrande crisis after mysterious trading halt revealed
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