Transaction is imminent: Evergrande shares suspended from trading

According to a media report, the struggling real estate giant China Evergrande is on the verge of a billion-dollar stake sale. Trading in the stock has been suspended in Hong Kong.

Shares in troubled Chinese real estate giant Evergrande were suspended from trading in Hong Kong this morning. The reason is that a major transaction will be announced. The Chinese state newspaper “Global Times” reported that the struggling real estate giant China Evergrande was on the verge of a billion-dollar stake sale. The group wants to sell 51 percent of its property management subsidiary Evergrande Property Services Group to competitor Hopson Development for more than five billion dollars.

Hopson shares have also been suspended from trading in Hong Kong. This applies to the publication of notices about a large transaction to buy shares in another listed company, said Hopson.

“Real estate management is probably the easiest to monetize,” said OCBC analyst Ezien Hoo. Apparently Evergrande is still trying to pay his bills. In the past few days, the company had let the deadline for several million dollar interest payments on dollar bonds pass without comment. Another $ 162 million will be due for similar bonds in the coming weeks.

Protect private investors

Evergrande is the second largest real estate developer in China and has financed its rapid growth with loans over the past few years. The corporation has more than $ 300 billion in debt and defaulted on payments. In the next few months, further interest payments in the millions will be due. In addition, the group has to pay suppliers and owes money to many small investors, including many employees.

According to media reports, around 1.4 million buyers across China are waiting for Evergrande apartments to be built or completed, most of which they have paid for in advance.

Investors worry that a collapse will have far-reaching consequences for the financial system and other industries. Against the background of financial difficulties, the shares of the Evergrande Group have already fallen by around 80 percent this year. Investors are therefore hoping for government support.

The Chinese government is still reluctant to come to Evergrande’s aid, but is said to have asked state-owned companies to take over assets of the widely ramified corporation. An Evergrande bankruptcy could have a dramatic impact on China’s banking and real estate sectors. The Chinese central bank said it would protect the interests of private investors. The company is so big that some experts fear a “risk of contagion” for the Chinese economy and beyond.