Hong Kong suspended trading in shares of the world’s most indebted property developer Evergrande on Monday pending a release of “inside information” from the Chinese company that could shed light on its restructuring and the fate of international investors.
The real estate developer, which defaulted on its international debts last year alongside a host of its peers, is at the centre of a nationwide liquidity crisis across China’s property sector, which drives economic growth and underpins employment.
Evergrande’s restructuring, which is expected to be the largest ever in China, is a defining moment in the history of Asia’s dollar bond market. The company borrowed more than $20bn in dollar-denominated bonds of its more than $300bn in liabilities. But it has made few detailed disclosures as Chinese authorities work to limit the impact of the company’s collapse.
One person close to the situation said Evergrande was expected to hold a call with international investors later on Monday. In a statement to the Hong Kong exchange, the company said the trading suspension was pending the release of information, but did not provide further details.
Evergrande first ran into severe liquidity issues last summer and began missing payments on international bonds in September as work on many of its hundreds of construction projects ground to a halt and the company battled to raise cash to pay workers and creditors.
On Sunday, state media outlet The Paper reported that the group was selling a 30 per cent stake in a company based in Nanjing, a major city in the eastern province of Jiangsu.
Hui Ka Yan, Evergrande’s billionaire chair who used to be the richest man in China, has tried to restore confidence in the company and last month ruled out fire sales of assets, saying the company would complete half of its remaining projects over the course of 2022.
Chinese property developers, which have underpinned rapid urbanisation in the country, often sell apartments to homebuyers before construction is complete. The threat of a backlash from homebuyers has made the property sector crisis both a political and economic challenge for President Xi Jinping’s government.
International investors in Evergrande, which operates mostly on the Chinese mainland, have been frequently left in the dark over its status and in January warned of potential legal action over a lack of engagement.
The fate of Evergrande and its vast debts has become a test case for China’s wider economic model, which has for years been anchored in real estate growth but is losing momentum. In 2022, the government unveiled a growth target of 5.5 per cent, its lowest in three decades.
Additional reporting by Wang Xueqiao