China Evergrande Shares Plummet By 25% After Arrest Of Wealth Management Staff
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On Monday, the stock of China Evergrande Group (3333. HK), a troubled property developer, experienced a sharp 25% drop. This plunge happened after the police arrested certain employees from its wealth management section, hinting at a new investigation that could compound the company’s current difficulties.
The situation adds to the problems that China Evergrande Group is facing as it grapples with a complex financial crisis and mounting concerns about its capacity to meet debt obligations. The detention of employees has raised more uncertainties about the company’s future.
The Company Is In A Serious Crisis Within China’s Real Estate Industry
Evergrande, the property developer with the topmost debt levels globally, is in a heated crisis within China’s real estate industry. This crisis has led to a string of payment defaults since late 2021, causing concerns in the global financial marketplace and creating fears of a widespread economic fallout.
The company’s stock trading was frozen for over a year, finally resuming on August 28, 2023. This suspension underlines the gravity of the difficulties faced by Evergrande and the more significant implications for the real estate factor.
In 2021, during protests by unhappy investors at Evergrande’s Shenzhen head office, Du Liang was recognized by company staff as the legal representative and general manager of Evergrande’s wealth management unit. Identifying Du Liang’s role sheds light on the internal dynamics of Evergrande during this time of turmoil.
Evergrande’s Stock Underwent Huge Losses
It is unclear whether Dun Liang was among the individuals arrested by the police. The official statement from the police did not provide the details regarding the precise number of people detained, the date when these detentions took place, or the specific charges they may be facing. This vital information must be more accurate to understand the situation’s complexity.
In the previous month, the Chinese developer recounted a net loss of 33 billion yuan (equal to $4.5 billion) from January to June for the year’s first half. This marks a significant decrease in losses compared to the same period in the previous year when they reported a loss of 66.4 billion yuan.
This substantial loss reduction may indicate efforts to boost the company’s financial situation, although it still faces many challenges.
