The Chinese real estate group Evergrande, which is facing great difficulties, on Monday (4) suspended operations on the Hong Kong Stock Exchange without giving a reason.
The company’s shares have fallen by nearly 80 percent since the start of the year, with the group on the brink of collapsing over massive debt.
“Trading in the shares of the China Evergrande Group will be interrupted,” said a statement from the Exchange. “Thus, the trade of all products related to the company will be suspended at the same time.”
Shares in the group’s electric vehicle company, which last week withdrew from listing on the Shanghai Stock Exchange, were not suspended but traded down 6% in early trading.
Company executives are battling a crisis that has caused more than $300 billion in debt, raising fears of contagion in the Chinese economy, which some believe could affect the rest of the planet.
The company announced last week that it would sell its shares for $1.5 billion in a regional Chinese bank to raise capital as it tries to pay interest to its bondholders.
Chinese officials have urged local governments to prepare for a possible collapse of Evergrande, according to state media reports, suggesting government intervention to rescue the real estate giant is unlikely.
The company hired experts such as financial services firm Houlihan Lokey, which advised Lehman Brothers to restructure when the bank went bankrupt during the 2008 global financial crisis, trying to avoid a meltdown.
China’s regulatory agencies also sent a team of financial advisers to assess the company, according to official media.
The group agreed in September to pay interest on a local bond, but there are no indications of paying two offshore notes, although there is a 30-day grace period before it is considered in default.
“The first obligation will be to ensure that people who buy homes get what they buy,” said Bruce Richards, president of Marathon Asset Management. “At the bottom of the priority list are offshore bond owners.”
The lack of liquidity has sparked public irritation and protests outside Evergrande’s buildings in China, with investors and suppliers demanding their money.
The group admitted that it faces “unprecedented challenges” and warned that it may not be able to meet its commitments.
The Chinese property market has faced rigorous scrutiny in recent months, based on new government measures to prevent speculation in the sector and contain debt.
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