The World
Shares in China Evergrande Group plunged 20% today after the heavily indebted developer announced on Sunday that it cannot issue new debt.
By mid-morning local time, the value of the company's shares - which resumed trading on the Hong Kong Stock Exchange at the end of August after being suspended for almost a year and a half - had fallen by 20%.
Similarly, the Real Estate sub-index of Hong Kong's benchmark Hang Seng stock index fell 2.58% at 2:35 p.m. local time (6:35 a.m. GMT).
Yesterday, Sunday, Evergrande announced in a statement that it cannot meet the requirements for issuing new debt securities at this time, as its subsidiary Hengda Real Estate Group is being investigated by the China Securities Regulatory Commission.
The announcement came just days after Evergrande said it had postponed its debt restructuring meetings for the third time.
In the middle of the month, police in the southeastern Chinese city of Shenzhen reported the arrest of an unspecified number of employees of the wealth management subsidiary Evergrande Wealth, although the group assured that the arrests would "not affect" its operations.
Last August, Evergrande filed for bankruptcy in the US to protect its assets from creditors while it continues to negotiate the restructuring of its debt.
The financial position of many Chinese real estate companies worsened after Beijing announced restrictions in August 2020 on access to bank financing for developers that, like Evergrande, had accumulated a high level of debt by supporting their growth for years with aggressive leverage policies.
In recent months, in response to the crisis in the sector, the Government has changed its tone and announced various support measures, with state banks also opening multimillion-dollar credit lines to various developers.
