HONG KONG: Shares of distressed developer China Evergrande and its profitable property management unit were suspended from trade in Hong Kong on Monday , sparking speculation about a possible asset divestment at the cash-strapped company.
But speculation soon turned to an asset sale and the move also seemed to rekindle broader market concerns about the risk of contagion or of a hit to China's property sector and the broader economy if Evergrande collapses or is liquidated at rock-bottom prices. Beijing has prodded government-owned firms and state-backed property developers to purchase some of Evergrande's assets, people with knowledge of the matter told Reuters last week.
Shares of Hopson, which has a market value of HK$60.4 billion , have jumped 40 per cent so far this year and it was rated B+ by Fitch in June. Monday's share trading suspension sent a shiver through the offshore yuan, which fell about 0.3 per cent against the dollar, and weighed on the Hang Seng benchmark index, especially financials and other developers.
Shares in Evergrande have plunged 80 per cent so far this year, while its bonds trade at distressed levels. Shares in its property services unit have dropped 43 per cent as the group scrambles to pay its many lenders and suppliers.
Sell all china stock first, talk later. China companies are getting delisted from US stock exchange too due to audit.
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