China Evergrande Group soared as it resumed stock trading following a halt last week, after its billionaire founder was put under police control on suspicion of committing undisclosed crimes.
The troubled property group’s shares jumped as much as 42 percent in early Tuesday trade, with unit Evergrande Property Services Group Ltd.’s also up nearly 14 percent.
Evergrande requested trading resumption from the Hong Kong stock exchange Monday, saying there’s no other pertinent information that needs to be disclosed. Shares in the company and its property services unit were suspended on Thursday, a day after people familiar with the matter said the firm’s founder had been taken away by police.
Evergrande sits at the center of a years-long property crisis that has hurt the Chinese economy and hammered confidence in the housing market. The company faces an Oct. 30 hearing at a Hong Kong court on a winding-up petition, which could potentially force it into liquidation. Its shares only resumed trading in August after a 17-month halt — dropping 87% upon their return — as the indebted developer unveiled more losses and delayed meetings with creditors.
“Evergrande shares are really volatile and always full of surprise moves,” said Willer Chen, senior research analyst at Forsyth Barr Asia Ltd.. “I’m not sure who will buy it up under this situation.”
Authorities in China notified Evergrande last week that chairman Hui Ka Yan has been subject to “mandatory measures” relating to “suspicion of illegal crimes,” according to a company statement. The Shenzhen-based firm didn’t elaborate on what the measures entailed or what crimes he is suspected of committing.
Chinese authorities are investigating whether Hui attempted to transfer assets offshore while the company was struggling to complete unfinished projects, the Wall Street Journal reported on Monday, citing unidentified people with knowledge of the matter.
“The board is of the view that the operations of the company are normal,” according to a separate filing by its Property Services unit. That language wasn’t included in the China Evergrande Group filing, which advised holders and investors to exercise caution when considering the stock.