By Sherry Qin
China Evergrande Group’s shares fell sharply before recovering after police in southern China detained some staff at its wealth-management unit, adding to the debt-laden developer’s woes.
Shares of China Evergrande fell as much as 24% to 0.47 Hong Kong dollar(US$0.06）on Monday before reversing to trade higher. The stock was recently up 4.8% at HK$0.65.
In a WeChat post Saturday, the Shenzhen city police said it recently “took criminal compulsory measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co.” The police also urged the public to report any cases of suspected fraud.
The police statement said the investigation is continuing but didn’t specify how many employees were detained nor the charges against them.
During protests at Evergrande’s Shenzhen headquarters to demand repayment of loans in September 2021, Du Liang was identified as the head of the company’s wealth-management unit, according to media reports.
On Aug. 31, the wealth-management unit said the company’s asset-disposal progress wasn’t proceeding as expected and no asset-disposal funds were obtained, so it couldn’t make repayments for that month, it said in a post on its official WeChat account.
Meanwhile, China’s National Administration of Financial Regulation approved the takeover of Evergrande’s insurance unit by a newly created state-owned insurer, the financial regulator said in a statement Friday.
China Evergrande defaulted in 2021. The company’s total liabilities at the end of June amounted to 2.39 trillion yuan (US$328.53 billion), it said in an exchange filing, adding that it will expedite the restructuring of offshore debts and work toward protecting the long-term interests of various creditors.
Since resuming trading on Aug. 28, China Evergrande shares have been highly volatile. The stock dived 79% upon its trade resumption. The following week, it surged by a record 83% after a state media report said Beijing may roll out new measures to shore up the property sector.
Write to Sherry Qin at [email protected]
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