Evergrande shares soar as trading resumes

China Shares of Chinese real estate company Evergrande surged 42% at one point on October 3, after several days of suspension.

Last week, Evergrande shares were suspended after news broke that chairman and founder Hui Ka Yan was under regulatory scrutiny. Evergrande later confirmed that Hui was under investigation “for suspected illegal activities.”

Today, the stock is trading again. During the session, Evergrande shares increased by 42% and closed up 20%. However, since August, the stock has lost nearly 75% of its value.

"The resumption of trading suggests there may be progress in the restructuring process," said Linus Yip, chief strategist at First Shanghai Securities.

An Evergrande housing project in Beijing (China). Photo: Reuters

Once China’s top real estate company, Evergrande has been mired in a debt crisis for the past two years due to excessive financial leverage. The company defaulted on its foreign debt in late 2021, causing global markets to worry about the contagion.

The crisis deepened last week when Evergrande said its Chinese subsidiary could not issue new debt because it was under investigation, complicating its restructuring plans.

Evergrande has less than a month to convince creditors to agree to a plan to restructure its foreign debt, a plan some analysts say is deadlocked and the risk of the company having to liquidate assets is rising.

Last week, Reuters reported that a group of major creditors of Evergrande planned to ask the court to sell the company's assets if it failed to come up with a new debt restructuring plan by October.

Caixin also said on September 25 that Xia Haijun, former CEO of Evergrande, and Pan Darong, former chief financial officer, are being investigated by authorities.

Ha Thu (according to Reuters)

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