China Evergrande shares tumble 25% after wealth management staff detained

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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

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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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