Evergrande rises 28.13% upon returning to the stock market in the midst of an investigation against its president

The indebted Chinese real estate giant Evergrande rose 28.13% this Tuesday on its return to the Hong Kong Stock Exchange, after suspending trading last Thursday when it was revealed that its president is the subject of an investigation for alleged “illegalities”.

China Evergrande shares resumed trading today, as the company announced in a statement, and, while those of the group rose 28.13% at the close, those of its real estate management subsidiary, Evergrande Services, fell 1.56%.

The Hong Kong Stock Exchange’s benchmark index, the Hang Seng, closed with losses of 2.69%, after the real estate sector ended lower.

The return to the Hong Kong stock market came after the company confirmed on Thursday that it had received “a notification from the authorities” which indicated that its president, Xu Jiayinalso known as Hui Ka-yanwas subject of “mandatory measures in accordance with the law for suspicion of illegal activities”.

That day, Bloomberg exclusively revealed that Xu, who became the richest man in China and one of the country’s first millionaires to practice philanthropy, has been in office since this month.under surveillance” In a place “designated”.

The Wall Street Journal published this Monday that the businessman is being investigated for being suspected of transferring assets abroad while the company was facing difficulties completing projects.

Chinese authorities have not specified the reasons for the investigation.

Xu’s situation adds uncertainty to the future of what is China’s largest real estate company, which could soon enter a liquidation process.

Evergrande It filed a bankruptcy petition in the United States in August and last week announced that it cannot issue new debt after several times postponing its meetings with creditors who must approve its restructuring plan.

According to accounts disclosed this summer by the company, its net losses amount to the equivalent of more than 80,000 million euros from the beginning of 2021 to the middle of this year.

At the end of June, Evergrande It had a total liability of 2.39 billion yuan (about 311,174 million euros).

The financial position of many Chinese real estate companies worsened after, in August 2020, Beijing announced restrictions on access to bank financing for developers who, such as Evergrandehad accumulated a high level of debt by supporting its growth for years with aggressive leverage policies.

In recent months, faced with the crisis in the sector, the Chinese Government has changed its tone and has announced various support measures, with state banks also opening multimillion-dollar lines of credit to various developers.