Shares in China Evergrande plunged 25% after wealth management employees were arrested

HONG KONG, Sept 18 (Reuters) – Shares in China Evergrande Group ( 3333.HK ) plunged 25% on Monday after police detained some employees at its asset management unit.

Evergrande, the world’s most indebted property developer, is at the center of a crisis in China’s real estate sector, which has seen a series of defaults since late 2021, roiling global markets and fueling fears of a contagion. The company’s shares were suspended for 17 months till August 28.

During a protest by disgruntled investors at Evergrande’s Shenzhen headquarters in 2021, Du Liang was identified by staff as the general manager and legal representative of Evergrande’s wealth management division.

“Recently, public security agencies took criminal enforcement actions against Du and other suspected criminals at Evergrande Financial Wealth Management Co,” police in the southern city of Shenzhen said in a social media statement Saturday night.

Reuters did not confirm that Du was among those detained, and the police report did not specify the number of people detained, the charges or the date they were taken into custody.

Company logo at China Evergrande Group headquarters in Shenzhen, Guangdong Province, China on September 26, 2021. REUTERS/Aly Song/File Photo Obtain licensing rights

Evergrande did not respond to requests for comment on the police action.

The stock fell 25% to HK$0.465 in morning trade, its lowest in two weeks. It pared losses by 0200 GMT, down 11%, trailing a 0.9% drop in the broader Hang Seng Index (.HSI).

Last month, the Chinese developer posted a net loss of 33 billion yuan ($4.5 billion) for the January-June period, compared with a loss of 66.4 billion yuan in the same period a year earlier.

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Earlier this month, Evergrande said it had delayed a decision on the offshore debt restructuring from September until next month to allow its debt holders more time to consider its restructuring plan.

($1 = 7.2799 Chinese Yuan Renminbi)

Reporting by Tony Kwok, Editing by Anne Marie Rowntree, Muralikumar Anantharaman and Lincoln Feast.

Our Standards: Thomson Reuters Trust Principles.

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