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China's Evergrande suspends shares from trading

China’s property development giant Evergrande has suspended shares from trading pending the release of ‘inside information’, the company has said. 

Evergrande, the world’s most-indebted developer with $300billion in liabilities, has been teetering on the brink of insolvency since Beijing changed borrowing rules to tame speculation on the property market.

If the firm collapses, there are fears it could send shockwaves through the global economy. Evergrande has already missed payments on $20billion in international bonds that were due last month, which are now deemed to be in cross-default.  

China's heavily-indebted property developer Evergrande has suspended its shares from trading pending the release of 'insider information' (file image)

China's heavily-indebted property developer Evergrande has suspended its shares from trading pending the release of 'insider information' (file image)

China’s heavily-indebted property developer Evergrande has suspended its shares from trading pending the release of ‘insider information’ (file image)

The property developer also missed new coupon payments worth $255million due last Tuesday, though both have a 30-day grace period.

The firm has set up a risk management committee with many members from state companies, and said it would actively engage with its creditors.

Local media reported over the weekend a city government in the Chinese resort island of Hainan had ordered Evergrande on Dec. 30 to demolish its 39 residential buildings within 10 days, due to illegal construction.

The buildings stretched over 435,000 square meters, the reports added, citing an official notice to Evergrande’s unit in Hainan.

Evergrande did not respond to request for comment on the Hainan development.

Evergrande has been struggling to stay afloat since Beijing tightened borrowing rules last year to stop speculation in the property sector (file image, an Evergrande construction site)

Evergrande has been struggling to stay afloat since Beijing tightened borrowing rules last year to stop speculation in the property sector (file image, an Evergrande construction site)

Evergrande has been struggling to stay afloat since Beijing tightened borrowing rules last year to stop speculation in the property sector (file image, an Evergrande construction site)

On Friday, Evergrande dialled back plans to repay investors in its wealth management products, saying each investor in its wealth management product could expect to receive 8,000 yuan ($1,257) per month as principal payment for three months irrespective of when the investment matures.

The move highlights the deepening liquidity squeeze at the property developer.

‘The market is watching the asset disposal progress from Evergrande to repay its debt, but the process will take time,’ said Conita Hung, investment strategy director at Tiger Faith Asset Management.

‘And the demolition order in Hainan will hurt the little homebuyer confidence remained in the company.’

Evergrande said last week 91.7% of its national projects have resumed construction after three months of effort. Many projects were halted previously after the developer failed to pay its many suppliers and contractors.

Shares of Evergrande shed 89% last year, closing at HK$1.59 on Friday.

Its EV unit China Evergrande New Energy Vehicle Group reversed early losses to rise 14% in early afternoon trade on Monday, while property management unit Evergrande Services also turned around from the red to rise 1%.

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