Trading in Evergrande shares has been suspended pending a 'major transaction' - and as another debt test looms

Trading in Evergrande shares has been suspended pending a 'major transaction' - and as another debt test looms
Evergrande is China's second-biggest property developer. Noel Celis/Getty Images
  • Trading in Evergrande shares was halted on the Hong Kong stock exchange on Monday pending a "major transaction."
  • Chinese media said a rival company was buying 51% of Evergrande's property services unit.
  • Evergrande faces another debt test on Monday, with no sign yet that it has met two recent offshore bond payments.

Trading in the shares of embattled Chinese property developer Evergrande and its property management unit were suspended on Monday pending an announcement about a "major transaction."

The trading halt came as another debt payment loomed, with no sign that the troubled company had met two obligations to foreign investors last week.

Chinese financial news services Cailan reported rival Hopson Development plans to buy 51% of Evergrande's property management unit, Evergrande Property Services Group. State media outlet Global Times also reported on the deal.

In a statement to the Hong Kong stock exchange, Evergrande had earlier said that trading in its shares had been suspended "pending the release by the company of an announcement containing inside information about a major transaction."

Evergrande, China's second-biggest property developer, is fighting for its life, as it tries to manage a debt pile north of $300 billion. There has been no sign yet that the company paid two recent interest payments on its dollar bonds.


The company is now facing another test of its solvency. Bloomberg reported a dollar bond worth $260 million from an entity called Jumbo Fortune Enterprises is guaranteed by Evergrande. Its due date is October 3, meaning it was effectively due on Monday.

Because the note has no grace period, non-payment would amount to a default, Bloomberg reported.

Evergrande's shares have fallen more than 80% so far this year in Hong Kong, where many of the biggest Chinese companies are listed. They were worth 2.959 Hong Kong dollars before trading was halted on Monday, down from above 14 HKD at the start of 2021.

Read more: Investors should watch these 4 key barometers to gauge whether the $52 trillion Chinese real estate market could implode in the aftermath of the Evergrande crisis, according to Goldman Sachs

Worries about Evergrande and a slowing global economy send Hong Kong's Hang Seng stock index tumbling on Monday, with the gauge closing 2.19% lower. Trading in mainland China is paused until Friday due to a national holiday.


Evergrande's perilous position and enormous size has raised concerns that the collapse of the company could rock the global economy, in much the same way the failure of US investment bank Lehman Brothers did during the financial crisis of 2008.

The consensus on Wall Street is that the Chinese government will be able to manage the fallout and that the global impact will be limited. Yet there are plenty of analysts who say investors are underappreciating the risks.

"If no sign of payment [on the Jumbo bond] occurs, the negative noise around the company and China's property market will increase once again," Jeffrey Halley, market analyst at Oanda in Asia, said.

"There still remains very little visibility from the Chinese government over Evergrande's fate, although a slow and steady dismantling of the company appears to be the favoured course right now," he added.