Evergrande is a huge Chinese real estate company that has been hit by a crisis. Since trade in the company’s stock in Hong Kong was stopped, its shares have gone up.
On Thursday, the company stopped trading its shares after confirming that its wealthy founder was being looked into by the government.
Evergrande shares went up by more than 40% in the first few hours of trading on Tuesday. By the end of the day, they were about 15% higher.
It stopped paying its bills in 2021, which caused a real estate crisis in China.
The company’s 17-month trading halt was lifted just a month before the new share suspension.
Evergrande said in a letter to the Hong Kong Stock Exchange on Monday, when the market was closed for the National Day holiday, that there is no other inside information about the company that needs to be shared.
What the economic problems in China mean for the rest of the world
The growth and fall of Evergrande’s founder, who was worth $1 billion,
When trade began again in August after being stopped for more than a year and a half, the price of Evergande’s shares dropped by almost 80%.
Since July 2020, the stock market value of the company has dropped by almost 99%. Each share is now worth about HK$ 0.35 ($0.05; £0.04).
Once China’s best-selling property developer, the company is now suffering with more than $300 billion (£248 billion) in debt.
When Evergrande didn’t pay its foreign debts in late 2021, it sent shock waves through the world’s financial markets.
Last week, it came out that its main business in China, Hengda Real Estate, couldn’t sell new debt because it was being investigated by the government. This made the problem worse.
The new information made it even harder for the company to renegotiate its agreements with its creditors.
Just a few days later, the company stated that its founder and chairman, Hui Ka Yan, was “subject to mandatory measures in accordance with the law due to suspicion of illegal crimes.”
In August, Evergrande filed for bankruptcy in the US under Chapter 15. Chapter 15 protects a foreign company’s assets in the US while it restructures its debts.
Some experts say that the latest setbacks have made it more likely that the company won’t be able to come to an agreement with its creditors on a plan to restructure.
In Hong Kong, a court will hear a motion to “wind up” Evergrande, which could force the company to go out of business. The meeting, which had been set for July, will now happen on October 30.
