HONG KONG, Sept 18 (Reuters) – Shares of troubled developer China Evergrande Group (3333.HK) plunged 25% on Monday after police arrested some employees at its wealth management unit, suggesting a new investigation that could worsen the real estate company’s woes.
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 that have roiled global markets and sparked fears of contagion. Trading in the company’s shares was suspended for 17 months, until August 28.
During protests by disgruntled investors at Evergrande’s headquarters in Shenzhen in 2021, Du Liang was identified by staff as the general manager and legal representative of Evergrande’s wealth management division.
“Recently, public security organs have taken criminal coercive measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co,” police in the southern city of Shenzhen said in a statement on social media on Saturday evening.
Reuters could not confirm that Du was among those arrested, and the police statement did not specify the number of people arrested, the charges or the date they were taken into custody.
Evergrande did not respond to request for comment on the police action.
The stock fell 25% to HK$0.465 in early morning trading, its lowest level in two weeks. It pared its losses around 0200 GMT, down 11%, lagging a 0.9% decline in the broader Hang Seng Index (.HSI).
Last month, the Chinese developer posted a net loss of 33 billion yuan ($4.5 billion) between January and June, compared with a loss of 66.4 billion yuan for the same period a year earlier.
Earlier this month, Evergrande said it had delayed making a decision on offshore debt restructuring from September until next month to give holders of its debt more time to review its restructuring plan.
($1 = 7.2799 Chinese yuan renminbi)
Reporting by Donny Kwok, editing by Anne Marie Roantree, Muralikumar Anantharaman and Lincoln Feast.
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