Business & Economy

Evergrande stocks up amid company president’s ‘illegalities’ probe

Beijing/Singapore, Oct 3 (EFE).- Indebted Chinese real estate giant Evergrande rose Tuesday in its return to the Hong Kong Stock Exchange, after suspending trading last week when it was revealed that its president is the subject of an investigation for alleged illegalities.

Shares of China Evergrande resumed trading, as the company announced in a statement, and toward mid-session rose 15.63 percent, while those of its real estate management subsidiary, Evergrande Services, fell 1.69 percent.

The return to the Hong Kong stock market came after the company confirmed Thursday that it had been notified by authorities that its President Xu Jiayin, or Hui Ka-yan, was subject to “mandatory measures in accordance with the law for suspected illegal activities.

That day, Bloomberg exclusively revealed that Xu, who became the richest man in China and one of the country’s first millionaires to practice philanthropy, has been “under surveillance” in a “designated” location since this month.

The Wall Street Journal published Monday that the businessman is being investigated for being suspected of transferring assets abroad while the company was facing difficulties completing projects.

Chinese authorities have not specified the reasons for the investigation.

Xu’s situation adds uncertainty to the future of what is China’s largest real estate company, which could soon enter a liquidation process.

Evergrande filed a bankruptcy petition in August in the United States and last week announced it cannot issue new debt after repeatedly postponing its meetings with creditors who must approve its restructuring plan.

According to accounts disclosed this summer by the company, its net losses amount to the equivalent of more than $83.93 billion from the beginning of 2021 to the middle of this year.

At the end of June, Evergrande had a total liability of RMB2.39 trillion (about $331.58 billion.)

The financial position of many Chinese real estate companies worsened after, in August 2020, Beijing announced restrictions on access to bank financing for developers that, like Evergrande, had accumulated a high level of debt, supporting their growth for years with aggressive leverage policies.

In recent months, faced with the crisis in the sector, the Chinese government has changed its tone and has announced various support measures, with state banks also opening multimillion-dollar credit lines to various developers. EFE


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