China Evergrande's shares plunge 25% amid staff detentions
Real estate company China Evergrande Group saw its shares fall by 25% after police detained some of the staff from its wealth management unit, signaling a new investigation that could exacerbate the property company's troubles. The world's most indebted property developer, Evergrande, is at the heart of a crisis in China's real estate sector, with a series of defaults since late 2021 that have shaken global markets and raised contagion fears.
The company reported a net loss of 33 billion yuan
The embattled developer has been grappling with numerous defaults since late 2021, leading to a 17-month suspension of trading in its stock until August 28. Evergrande reported a net loss of 33 billion yuan ($4.5 billion) for January-June 2023, compared to a 66.4 billion yuan loss in the same period the previous year. The company has postponed its decision on offshore debt restructuring from September to next month, adding to its woes.
Police statement does not specify the number of staff detained
Shenzhen police announced on social media that they have taken "criminal compulsory measures" against Du Liang and other suspects at Evergrande Financial Wealth Management. Du Liang was identified as the General Manager and legal representative of Evergrande's wealth management division during the 2021 protests held at Evergrande's headquarters. The police statement did not provide details on the number of people held in custody, the charges, or the date of custody.
Debt restructuring delay exacerbates crisis
The delay in deciding on offshore debt restructuring has intensified Evergrande's troubles, as it already faces a crisis in China's real estate sector. The recent criminal investigation into its wealth management division staff adds another layer of uncertainty for the company. As investors and debt holders await Evergrande's restructuring plan, the outcome of these developments could have significant implications for China's real estate market and the global economy.
