Evergrande Shares Experience Volatility as Trading Resumes Amid Chairman Investigation

Shares of China Evergrande experienced a significant increase, surging as much as 42% in volatile trading on Tuesday. This surge came just days after the troubled property developer announced that its billionaire founder, Hui Ka Yan, is under investigation for undisclosed crimes.

Evergrande’s stock faced suspension last Thursday following reports of police surveillance on its chairman. The company later confirmed that Hui is indeed under investigation.

In a statement released late Monday, Evergrande noted, “There is currently no other inside information in relation to the company that needs to be disclosed.”

As of the latest trading session, Evergrande’s shares were up 15.6%, priced at HK$0.37, though they have lost roughly 75% of their value since August.

Analysts suggest that the resumption of trading might have sparked speculation about potential progress in the company’s restructuring efforts. Linus Yip, chief strategist at First Shanghai Securities, mentioned this possibility.

Once a leading Chinese developer, Evergrande has been grappling with a debt crisis that escalated after it defaulted on its offshore debt obligations in late 2021, causing concern in global markets about the potential for widespread fallout.

The situation worsened last week when the company revealed that its main unit in China was unable to issue new debt due to the ongoing investigation, further complicating its restructuring plans.

With time running out, Evergrande needs to gain creditors’ approval for its offshore debt restructuring. Reports indicate that a significant group of Evergrande’s offshore creditors is considering joining a liquidation petition against the company if a new debt revamp plan isn’t presented by the end of October.

Given the recent developments, some analysts believe the debt restructuring efforts may be failing, increasing the likelihood of liquidation. A hearing regarding the winding-up petition is scheduled for October 30.