The company’s share price fell to $0.47 around nine in the morning in Hong Kong (01:00 GMT), after it had ended trading on Friday before the weekend at a price of 0.62.
The decline comes two days after police in the southern Chinese city of Shenzhen announced the arrest of a number of employees at Evergrande Wealth Management, a financial company affiliated with the real estate group.
While the police did not specify the number of employees or the reason for their arrest, the authorities urged citizens to report any cases of corruption they suspect.
Evergrande was considered one of the largest real estate development groups in China, but the huge debts that it is now suffering from have contributed to deepening the crisis facing this sector in the second largest economy in the world, and raised fears of negative repercussions on global markets.
The real estate sector, along with the construction sector, contributes about a quarter of the gross domestic product in China, and they are considered one of the pillars of economic growth in the country, especially in light of the boom it has witnessed over the past decades.
But the enormous debts accumulated by the major groups in the sector, including Evergrande, whose total debt was estimated in late June at about $328 billion, made the Chinese authorities view the sector as an unacceptable source of danger to the country’s financial system and the stability of its economy.
The authorities began to impose gradual restrictions on these groups’ borrowing starting in 2020, causing a series of defaults, most notably Evergrande.
On Friday, the Chinese financial authorities approved the acquisition of Evergrande Life Insurance by the state-owned Haigang Company, a troubled insurance company affiliated with the group.
Last week, Moody’s lowered its forecast for the real estate sector in China from “stable” to “negative,” considering that the impact of the support measures taken by the government will be limited to the short term.
© 2023 AFP
2023-09-18 05:30:10
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