Shares
in crisis-hit Chinese property giant Evergrande have been suspended in Hong
Kong amid reports its chairman has been placed under police surveillance.
It follows reports earlier
this week that other current and former executives had also been detained.
Thusday's market statement
did not give a reason for the trading halt.
But it marks another low
for the heavily indebted property giant which defaulted in 2021, triggering
China's current real estate market crisis.
In August, the firm filed
for bankruptcy in New York, in a bid to protect its US assets as it worked on a
multi-billion dollar deal with creditors.
The market trading halt now comes just a month after the firm's previous 17-month suspension was lifted.
Evergrande - once valued as
the world's most valuable property developer - is at the center of a real
estate crisis threatening the world's second-largest economy.
With more than $300bn (£247bn) of debt, the firm has been scrambling to raise cash by selling assets and shares to repay suppliers and creditors.
Most of Evergrande's debt
is owed to people within China, many of whom are ordinary citizens whose homes
have not been finished.
When the firm defaulted on its huge debts in
2021, it sent shockwaves through global financial markets as the
property sector contributes to roughly a quarter of China's economy.
Several other of the
country's major developers have defaulted over the past year and many are
struggling to find the money to complete developments.
Why would it matter if Evergrande collapses?
There are several reasons
why Evergrande's problems are serious.
Firstly, many people bought
property from Evergrande even before building work began. They have paid
deposits and could potentially lose that money if it goes bust.
There are also companies that do business with Evergrande. Firms including construction and
design firms and materials suppliers are at risk of incurring major losses,
which could force them into bankruptcy.
The third is the potential
impact on China's financial system: If Evergrande defaults, banks and other
lenders may be forced to lend less.
This could lead to what is
known as a credit crunch when companies struggle to borrow money at affordable
rates.
A credit crunch would be
very bad news for the world's second-largest economy, because companies that
can't borrow find it difficult to grow, and in some cases are unable to
continue operating
This may also unnerve
foreign investors, who could see China as a less attractive place to put their
money.
New plan
In July, Evergrande
revealed it had lost a combined 581.9bn yuan ($79.6bn;
£65.6bn) over the pst two years.
It has been working on a
new repayment plan and the company seemed to have been moving closer to
resolving the problem after it filed for US bankruptcy
protection.
Its latest plan was to
reissue its overseas debt as new bonds that it had to pay back in about 10
years' time, as well as offering its creditors stakes in the company as
shares.
But earlier this week, Evergrande
revealed its mainland unit Hengda Real Estate had defaulted on
4 billion yuan (£449m; $547m) of debt.
Chinese business wire
Caixin also reported that several current and former executives have been
detained.
Then on Wednesday,
Bloomberg News reported the firm's founder Hui Ka Yan, who is also known as Xu
Jiayin, had been taken away by police this month and was being monitored at a
designated location.
The BBC has been unable to
independently confirm Bloomberg's reporting.
Trading in its two other
units - the property services and electric vehicle - was also suspended on
Thursday.
"China's
property-sector stress will continue to pose cross-sector credit risks in the
near term," wrote Lan Wang and Duncan Innes-Ker of Fitch Ratings.
"The government's modest policy easing to date is unlikely to drive a sharp turnaround in homebuyers' sentiment, even though it has led to some recent improvements in broader economic indicators," their report said.
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