HONG KONG – Shares of embattled developer China Evergrande Group plunged 25 per cent on Monday after police detained some staff at its wealth management unit, suggesting a new investigation that could add to the property giant’s woes.
Evergrande, the world’s most indebted property developer, is at the centre of a crisis in China’s real estate sector that has seen a string of defaults since late 2021 that have rattled global markets and sparked fears of contagion. Trading in the company’s stock was suspended for 17 months until Aug 28.
During protests by disgruntled investors at Evergrande’s Shenzhen headquarters in 2021, Du Liang was identified by staff as general manager and legal representative of Evergrande’s wealth management division.
“Recently, public security organs took criminal compulsory measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co,” police in the southern city of Shenzhen said in a social media statement on Saturday night.
Reuters could not confirm that Mr Du was among those detained, and the police statement did not specify the number of people detained, the charges or the date they were taken into custody.
Evergrande has not responded to request for comment on the police action.
The stock fell as much as 25 per cent to HK$0.465 in early morning trade, the lowest in two weeks. It pared losses by 10am Hong Kong time, down 11 per cent, lagging a 0.9 per cent fall in the broader Hang Seng Index .
Last month, the Chinese developer posted a January-June net loss of 33 billion yuan (S$6.3 billion), versus a 66.4 billion yuan loss in the same period the previous year.
Earlier this month, Evergrande said it had delayed making a decision on offshore debt restructuring from September to next month to allow holders of its debt more time to consider its restructuring plan.
Image by: China Evergrande Group