Evergrande shares rise after day-long trading suspension

China Evergrande is struggling under hundreds of billions of dollars worth of debt
AFP

Shares in embattled Chinese property giant Evergrande rallied on Tuesday after a day-long suspension, as the company confirmed it had been ordered to demolish part of a resort in Hainan province.

China’s property firms have struggled in the wake of Beijing’s drive to curb excessive debt in the real estate sector as well as rampant consumer speculation.

Evergrande confirmed on Tuesday that it had received orders to tear down 39 buildings at the Ocean Flower Island development in the southern Chinese province.

The decision came from authorities on December 30 and only affected one plot of land under development, the company said in an announcement to the Hong Kong stock exchange.

“The company will actively communicate with the authority in accordance with the guidance of the decision letter and resolve the issue properly,” the announcement read.

The company’s shares climbed as much as 10 percent soon after opening for the afternoon session in Hong Kong before settling back to end 1.26 percent up at HK$1.61.

Authorities have said the structures were built illegally on an artificial archipelago in the tourist hub, according to Chinese media.

Evergrande’s latest announcement marked the end of a brief trading suspension that came into effect Monday morning.

Drowning in $300 billion in liabilities, Evergrande has struggled to repay bondholders and investors after Beijing’s crackdown suddenly turned off the liquidity taps for property developers.

It previously saw a period of suspended share trading back in October.

The troubled developer was labelled as being in default by international ratings firms last month after it failed to repay liabilities on time.

Earlier struggles to pay suppliers and contractors because of the debt crisis led to sustained protests from homebuyers and investors at the group’s Shenzhen headquarters in September.

In recent months, the company has repeatedly said it will complete its unfinished projects and deliver them to buyers in a desperate bid to salvage its debts, despite having missed the earlier payment of more than $1.2 billion.

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