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Evergrande China Group: Shares suddenly suspended from trading in Hong Kong

The troubled Chinese property giant has spooked investors yet again after making a dramatic and unexpected announcement.

Embattled Chinese property juggernaut Evergrande has sent shockwaves through global markets after unexpectedly announcing its shares will be suspended from trading on Monday.

In typical secretive fashion, the company provided no explanation for the mystery move, sparking rampant speculation it was facing a fresh crisis as it scrambles to raise the cash needed to pay down its exploding debt.

“Trading in the shares of China Evergrande Group will be halted at 9.00am today (3/1/2022). Accordingly, all structured products relating to the Company will also be halted from trading at the same time,” the company said in a concerningly brief statement this afternoon.

In 2021, the real estate heavyweight earned the unwelcome title of the world’s most indebted real estate firm after racking up staggering debts of around $A408 billion.

In recent months there have been growing signs the company is lurching further towards ruin, with the company’s share price tanking and a string of payment deadlines being missed, which eventually saw Evergrande officially declared in default for the first time in December.

According to Bloomberg, Evergrande wound back payment plans on billions of dollars of overdue wealth management products on Friday, revealing it would repay investors less per month toward their principal between December and February 2022 than originally announced.

The publication reported that another Chinese property developer, Cifi Holdings, offered to buy its outstanding 5.5 per cent bond due in 2022 at $1000.5 for each $1000 in principal amount plus accrued and unpaid interest.

In a statement posted on Evergrande’s website, the company said the unfolding situation facing to firm was not “ideal” and that it would “actively raise funds” before updating the repayment plan in March.

It comes after the company also failed to make some interest payments on its offshore bonds last week.

The shock trading halt saw Hong Kong-listed shares of companies associated with Evergrande plummet, with China Evergrande New Energy Vehicle Group dropping 1.7 per cent and Evergrande Property Services falling 3.03 per cent.

‘Illegal’ apartments to be demolished

The latest development comes hot on the heels of local media reporting that 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 writing appears to be on the wall’

IG markets analyst Kyle Rodda told last month that 2021 had been a horror year for the property juggernaut, and warned of further pain ahead.

“Basically, as we’ve been expecting, the company is going through a controlled collapse, and it’s technically defaulting on its debt now,” he said.

“Via various channels, many of which are a little opaque, the company has been able to meet some of its obligations, and isn’t completely illiquid yet.

“But the writing appears on the wall.”

Mr Rodda predicted moving forward, there would be a co-ordination by Chinese authorities to “sell-off the company’s good assets, pay back bond holders with quite a hair cut, and ensure that incomplete projects are largely finished” to avoid putting too much stress on the property market.

Originally published as Mystery as Evergrande shares suddenly suspended from trading in Hong Kong

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