In a filing to Hong Kong’s stock exchange on Thursday, the developer said it had “received notification from relevant authorities” that Hui “has been subject to mandatory measures in accordance with the law due to suspicion of illegal crimes.” The developer would suspend trading “until further notice.”
The admission confirms earlier reports that the billionaire developer was in some form of police custody. On Wednesday, Bloomberg reported that Chinese law enforcement put Hui under “residential surveillance,” a measure that confines him to a single location and bars outside communication without permission. (Such measures last no longer than six months, and don’t always lead to criminal charges, according to Bloomberg).
Evergrande’s shares have only been back on the market for a month, resuming trading on Aug. 28. During that period, Evergrande shares fell over 80%, from $0.21 to $0.04. (Evergrande shares traded around $4 at their peak in 2017).
Evergrande is at the heart of China’s real estate crisis that has impacted fellow real estate giant Country Garden and others. Once among China’s largest developers, Evergrande loaded up on debt to fund its expansion. Yet new rules from Beijing meant to encourage developers to reduce their risk instead sparked a liquidity crisis.
As funding dried up, Evergrande defaulted on its debt in December 2021, which in turn pushed other developers into default as well.
Evergrande lost a combined $81 billion in 2021 and 2022, according to financial results published earlier this year as it prepared to resume trading of its shares.
In August, the company said it lost another $4.5 billion in the first half of 2023, and reported $327 billion in liabilities against $238 billion in assets, according to an exchange filing in August when its shares resumed trading.
Evergrande’s very bad week
Evergrande’s trading suspension caps days of bad news. On Friday, the company canceled