Shares of China Evergrande suspended as chairman under police watch

An Evergrande sign is seen near residential buildings at an Evergrande residential complex in Beijing, China Sept 27, 2023. REUTERS/Florence Lo

HONG KONG  -Trading in shares of China Evergrande were suspended on Thursday after a report its chairman had been placed under police surveillance, intensifying concerns over the developer’s future as it struggles with a growing threat of liquidation.

On Wednesday, Bloomberg News reported that Hui Ka Yan, who founded Evergrande in 1996, was taken away by police this month and was being monitored at a designated location

The report said it was not clear why Hui was under surveillance. Reuters could not immediately verify the news.

READ: Pressure on China Evergrande intensifies; chairman under police watch

With more than $300 billion in liabilities – roughly the size of Finland’s gross domestic product – Evergrande has become the poster child of a debt crisis in China‘s property sector, which contributes to roughly a quarter of the economy.

The company’s debt woes took a rapid turn for the worse this week after it said it was unable to issue new debt due to an investigation into its main China unit, further complicating a proposed restructuring plan.

READ: China Evergrande unable to meet qualifications for notes issuance

Reuters reported on Tuesday that a major Evergrande offshore creditor group was planning to join a liquidation court petition filed against the developer if it does not submit a new debt revamp plan by the end of October.

The company’s restructuring plan now looks set to falter and the risks of the company being liquidated are rising, some analysts said.

Trading in its Hong Kong-listed shares and those of its property services and electric vehicle units was suspended on Thursday.

Shares of Evergrande had resumed trading in late August after a 17-month suspension.

Evergrande‘s stock last closed at HK$0.32.