China's Real Estate Giant Evergrande Halts Share Trading in Response to Rumors of Detained Executives

Shares of Evergrande, a troubled Chinese property giant, have been halted from trading in Hong Kong. This comes amidst reports that the company's chairman is under police surveillance, following the detention of other current and former executives earlier in the week. The reason for the trading halt was not specified in Thursday's market statement. However, it is another blow for Evergrande, which defaulted last year and triggered a real estate crisis in China. In an attempt to protect its US assets while negotiating a multi-billion dollar deal with creditors, Evergrande filed for bankruptcy in New York in August. Just one month after the end of its previous 17-month suspension, the company's shares are now suspended once again. Evergrande, once considered the world's most valuable property developer, is at the center of a real estate crisis that threatens China's second-largest economy. With a debt of over $300 billion, the company has been struggling to raise cash by selling assets and shares to repay suppliers and creditors. The majority of Evergrande's debt is owed to Chinese citizens, many of whom are ordinary individuals waiting for their homes to be completed. The company's default in 2021 sent shockwaves through global financial markets due to the property sector's significant contribution to China's economy. Over the past year, several major developers in China have also defaulted and faced challenges in financing their projects. In July, Evergrande disclosed losses of $79.6 billion over the past two years. While the company had been working on a new repayment plan and appeared to be making progress after its US bankruptcy protection filing, it recently revealed that its mainland unit, Hengda Real Estate, had defaulted on a debt of 4 billion yuan. Reports have emerged that founder Hui Ka Yan, also known as Xu Jiayin, had been taken away by police and placed under surveillance. However, the BBC has been unable to independently verify these claims. Trading in Evergrande's other units, including property services and electric vehicles, was also suspended. Experts from Fitch Ratings have warned that the stress in China's property sector will continue to pose credit risks across various industries. They note that the government's limited policy easing is unlikely to significantly improve homebuyers' sentiment, despite some recent improvements in broader economic indicators.