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STORY: Trading in shares of China Evergrande Group was suspended on Hong Kong’s stock exchange Thursday amid growing fears for its survival.
The move came a day after a report that its chairman had been placed under police watch.
Bloomberg reported Wednesday (September 27) that Hui Ka Yan was taken away this month, and was being monitored at a designated location.
Reuters could not immediately verify the news.
Evergrande is the world's most indebted firm, with more than $300 billion in liabilities. That’s roughly the size of Finland’s economy.
The developer has become the poster child of a debt crisis in China’s property sector, which makes up about a quarter of the country’s economy.
One analyst says the company’s plight is worsening, with liquidation now a real concern.
Willer Chen at Forsyth Barr Asia says investors had hoped the firm could escape trouble:
“We hoped that through this phase, they would gradually revitalize their assets by selling them and thereby generate cash flow to repay bond investors. However, if it now turns out to be a liquidation instead of a restructuring, the uncertainty for bond investors may become even greater.”
Evergrande had planned to restructure its offshore debt.
But that plan now looks in doubt, following news that it was unable to issue new bonds due to a probe into its main domestic unit.
Reuters reported on Tuesday (September 26) that a major Evergrande offshore creditor group was planning to join a liquidation court petition filed against the developer.
The firm's latest woes come despite Beijing rolling out a raft of measures, including cutting existing mortgage rates, to revive the real estate sector.
Analysts have so far been skeptical that the moves will have much effect.