Shares in China's Evergrande plunge after employees' arrest | Inquirer Business

Shares in China’s Evergrande plunge after employees’ arrest

/ 12:23 PM September 18, 2023

HONG KONG, China  -Shares in Chinese property giant Evergrande plunged by around 25 percent as markets opened in Hong Kong on Monday, following the arrest of several of the debt-ridden company’s employees in China.

Evergrande’s stock price dipped to 0.47 around 9 am in Hong Kong (0100 GMT) on Monday, before ticking back up, after closing at 0.62 Hong Kong dollars on Friday.

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The drop comes two days after police in the southern Chinese city of Shenzhen said in a statement that several employees of Evergrande’s financial subsidiary, Evergrande Wealth Management, were arrested.

The authorities did not specify the number of employees or the charges against them.

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The statement called on the public to report any cases of suspected fraud.

Evergrande, the world’s most-indebted property developer with an estimated debt of $328 billion (307 billion euros) at the end of June, has been at the center of China’s deepening market crisis, raising fears of a global spillover.

READ: Evergrande’s liabilities, depleted coffers raise business viability concerns

Once a star player in an industry key to China’s economic growth, Evergrande’s enormous debt has been seen by Beijing as an unacceptable risk for the country’s financial system.

READ: Contagion fears spread as China property sector cash crunch intensifies

Authorities have gradually tightened developers’ access to credit since 2020, and a wave of defaults have followed — notably that of Evergrande.

On Friday, China’s national financial regulator greenlighted a takeover of Evergrande’s insolvent insurance subsidiary, Evergrande Life Insurance, by new state-owned vehicle Haigang Life Insurance.

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TAGS: China, Evergrande, property, stocks
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