China Evergrande has had a wild ride on the stock market in the three weeks since trading was resumed
- China Evergrande’s shares have been extremely volatile since they resumed trading on August 28.
- The stock tanked 25% early on Monday following news that some of its wealth management unit staff have been detained.
- They had slumped over 80% on August 28. A week later, they rallied by over 80% in a single day.
Embattled Chinese real-estate developer Evergrande is likely keeping investors up at night — the company’s shares have been on a wild ride since they resumed trading on August 28 following a lengthy suspension.
On Monday, shares of China Evergrande Group plunged 25% in early trade following news that police in the southern city of Shenzhen detained some staff at its wealth management unit.
The authorities wrote on an official WeChat account on Saturday that they had “recently” detained staff — including one identified by his family name, Du — per Insider’s translation.
The notice did not provide further details on the number of staff members detained and the reasons for their detention. It also did not provide further details about Du.
Evergrande’s shares have since recovered some losses over the trading day on Monday. But they are still 63% lower than the last trading price of 1.65 Hong Kong dollars, or 21 cents apiece before a 17-month suspension since March 2022.
The stock’s gyration on Monday followed massive volatility since the suspension was lifted.
On August 28 — the first day the stock resumed trading — Evergrande’s shares slumped by 87%, placing it in penny stock territory.
A little over a week later, on September 6, Evergrande shares rallied by 82%, thanks to the news that Beijing may introduce measures to support China’s beleaguered property sector.
Evergrande is worth about 8.2 billion Hong Kong dollars now – a massive fall from grace from the company’s heydays in 2017 when it was worth nearly 420 billion Hong Kong dollars.
The developer — once China’s second-largest — faced a liquidity crisis in 2021 that triggered broader concerns about the country’s real-estate sector. The sector, along with related industries, contributes as much as 30% to the country’s GDP.
Evergrande had $300 billion worth of liabilities when troubles first began and saw its liabilities balloon to about $340 billion by the end of 2022. The company filed for bankruptcy protection in the US on August 17.
China is trying to revive its property sector by stimulating consumer demand, but consumers are unlikely to be clamoring for new apartments amid record-high youth unemployment rate and slower economic growth, experts told Insider.
China Evergrande shares on the Hong Kong Exchange were trading 1.6% lower at 62 Hong Kong cents at last check.
China Evergrande and Shenzhen Nanshan District Police Bureau did not immediately respond to requests for comment from Insider.