Chinese Property Giant Evergrande Stock Halts Trading Amid Mounting Woes

Shares of crisis-hit China Evergrande Group EGRNF have been suspended in Hong Kong amid reports that its chairman has been under police surveillance, marking another low for the heavily indebted Chinese property giant, which defaulted in 2021, triggering China's current real estate market crisis.

Following Evergrande's inability to repay investors, Chinese authorities have taken certain employees from the company's wealth management division into custody.

On Wednesday, Bloomberg News reported that the firm's founder, Hui Ka Yan, had been taken away by police this month and was monitored at a designated location.

The company faces an October 30 hearing at a Hong Kong court on a winding-up petition, which could potentially force it into liquidation.

Earlier this month, Evergrande postponed a scheduled debt restructuring meeting with its creditors. 

In an official filing, the company cited disappointing sales figures since announcing a debt restructuring plan in March.

As such, Evergrande "considers it necessary to re-assess the terms of the proposed restructuring to meet the company's objective situation and the demand of the creditors."

A Bloomberg Intelligence index tracking Chinese real estate developers' stocks has declined by 3.5%, reaching its lowest point since 2011. Homebuyer confidence continues to appear vulnerable as we approach a crucial holiday sales season, which will serve as a litmus test for the impact of recently introduced stimulus measures.

Evergrande shares last closed at 32 Hong Kong cents on Wednesday.

Evergrande's shares have experienced suspensions before. In March of the previous year, trading halted, only to resume on August 28 following a 17-month gap.

The company reported a loss attributable to shareholders of 33 billion yuan ($4.15 billion) for the six months ended June. Operating loss stood at 11.72 billion yuan, down from 39.36 billion in the first half of 2022.

Hui, once ranked as the second-wealthiest individual in Asia, witnessed a significant decline in his fortune as his real estate empire faced hardships. 

As per the Bloomberg Billionaires Index, Hui's current net worth stands at approximately $1.8 billion, a sharp contrast to the $42 billion he possessed in 2017.