Yahoo Finance News
written by Bloomberg News staff
Thursday September 28, 2023
China Evergrande Group said its billionaire chairman Hui Ka Yan is suspected of committing crimes, escalating the legal peril for a tycoon whose indebted real estate conglomerate has saddled investors, homeowners and suppliers with billions in losses.
Authorities notified Evergrande that Hui has been subject to “mandatory measures,” due to “suspicion of illegal crimes,” according to a company statement to the Hong Kong stock exchange Thursday. It didn’t elaborate on what the measures entail or what crimes he may have committed. The company’s shares will remain halted until further notice, Evergrande said.
The announcement comes a day after people familiar with the matter told Bloomberg News that Hui was taken away by Chinese police earlier this month and put under so-called residential surveillance, a type of police action that falls short of formal detention or arrest. While details of the allegations against Hui remain unclear, authorities earlier this month detained some staff at Evergrande’s wealth management arm. The unit said on Aug. 31 that it couldn’t make payments on products held by individual investors because of a liquidity crunch.
Hui’s accelerating downfall creates fresh uncertainty over the fate of Evergrande after setbacks to its restructuring plan in recent days roiled markets and raised the risk of a liquidation. It also casts another shadow over China’s beleaguered real estate market, which is headed into the crucial Golden Week sales period. It’s likely to raise anxiety among China’s other property tycoons, many of whom are facing similarly dire financial straits. Hui was one of the country’s most politically connected tycoons and among the richest people in Asia in 2017, before President Xi Jinping started his campaign to rein in China’s property industry.
Hui’s status under residential surveillance means he’s unable to leave the location designated by police, meet or communicate with others without approval, based on China’s Criminal Procedure Law. Passports and identification cards must be handed to police but the process shouldn’t exceed six months, according to the law.
The mandatory, or coercive measures cited in the Evergrande statement can take several forms, including summons, release on bail and residential surveillance, detention and arrest, according to the procedure law. The measures can be enforced by the police, courts or prosecutors.
Other people taken into custody recently include Peter Xu, one of Hui’s sons, China Business News reported.
Evergrande sits at the center of a years-long property crisis that has hurt the Chinese economy and hammered confidence in the housing market. Last week, the developer said it scrapped key creditor meetings and has to revisit its plan to restructure its offshore debt. Since then, it has disclosed it was unable to meet regulatory qualifications to issue new bonds — a key component of the debt overhaul — while its mainland unit failed to repay an onshore bond.
“There is almost zero possibility that the finances of Evergrande will stabilize let alone improve,” said Willy Lam, an adjunct professor at the Chinese University of Hong Kong who has authored several books about Chinese politics.
A Bloomberg Intelligence gauge of Chinese developer stocks dropped 0.6% on Thursday to lowest level since 2011. Homebuyer sentiment remains fragile ahead of a key holiday sales period that will test the effectiveness of stimulus measures rolled out in recent weeks.
The son of a wood cutter who grew up in poverty, Hui built Evergrande into China’s largest developer by using leverage to buy massive tracts of land and scoop up rivals, before branching out into industries ranging from bottled water to professional soccer and electric vehicles.
He was once Asia’s second-richest person, only to see his net worth slump as his property empire crumbled. Hui is now worth about $1.7 billion, down from $42 billion in 2017, according to the Bloomberg Billionaires Index. Evergrande has 2.39 trillion yuan ($327 billion) in liabilities.
The 64-year-old has been a Communist Party member for more than three decades. In 2008, he was elected to join the Chinese People’s Political Consultative Conference, an elite group comprising government officials and the biggest names in business. He later secured two other five-year terms.
Things took a turn for the worse in 2021, when Evergrande officially became a defaulter and authorities from its home province of Guangdong led what is poised to be one of the nation’s biggest debt restructurings.
Hui had been part of the CPPCC’s elite 300-member standing committee since 2013, but he was told not to attend the annual convention in March last year as his property group became the biggest casualty of the nation’s credit crunch.
China’s central bank has blamed Evergrande’s demise on its “own poor management” and “reckless expansion,” and the government has urged Hui to use his fortune to help repay investors.
“Evergrande’s recent negative headlines couldn’t have come at a worse time as Beijing pushes hard to revive homebuying,” said Neo Wang, Evercore ISI’s New York-based managing director for China research.
China Evergrande chairman under scrutiny on suspicion of illegal crimes https://t.co/N7vOyphu7M pic.twitter.com/GWWaGMxMEv
— Reuters (@Reuters) September 28, 2023
Are there 'legal' crimes?
— Connoisseur (@Suba_star) September 28, 2023
Oh damn, illegal crimes are even worse than legal crimes.
— Purcell Latimer (@PurcellLatimer) September 28, 2023
The Communist Party has the rights to all of the "legal crimes."
— Woman Called Roan Horse (@SelinaJ13294330) September 28, 2023
Reuters News
reporting by Upasana Singh in Bengaluru and Sumeet Chatterjee; editing by Arun Koyyur
Thursday September 28, 2023
China Evergrande Group (3333.HK) said on Thursday authorities have informed the embattled property developer that its chairman Hui Ka Yan has been subject to mandatory measures in accordance with the law due to suspicion of illegal crimes.
Trading in the company's shares was suspended earlier in the day after a report that its chairman had been placed under police watch. Evergrande said shares will remain suspended until further notice.
With more than $300 billion in liabilities - roughly the size of Finland's gross domestic product - Evergrande has become the poster child of a debt crisis in China's property sector, which contributes to roughly a quarter of the economy.
Evergrande grew rapidly through a land-buying spree backed by loans and by selling apartments quickly at low margins, making Hui Asia's richest man in 2017, according to Forbes.
But with its overall liabilities ballooning to more than $300 billion, it has come under pressure as the property market weakened and Chinese regulators cracked down on companies with high debt levels.
serpentza published May 14, 2022: The Secret behind China's Ghost Cities. What is truly the purpose of these hollow concrete labyrinths, what secret lies within? 13 minutes long.
Wall Street Journal published September 11, 2023 What This $100B Ghost City Reveals About China’s Property Crisis. Country Garden, once seen as one of China’s most stable property developers, is now struggling financially, leaving the future of unfinished megadevelopments like the $100 billion Forest City in doubt. The real estate project in southern Malaysia was planned to house around 700,000 people, but only 9,000 people live there with most units left empty. So why are Chinese real estate companies like the Evergrande Group and Sunac falling into financial distress? WSJ explains why China’s real estate developers are in the red.
China Observer published September 7, 2023 Taiwanese Business Exit China | Kunshan: From World's Factory to Ghost Town | Everyone Has Left.
The county of Kunshan in Jiangsu Province, China, once held the reputation as one of the most concentrated areas of Taiwanese investment in mainland China, earning it the nickname "Little Taipei". In recent years, fueled by its robust manufacturing sector, Kunshan has maintained its position as the strongest economic powerhouse at the county level in China, even acquiring a reputation as a miniature "world factory".
The Foxconn campus in the northern part of the county, a significant contract manufacturer for Apple, has been operational for 30 years, attracting tens of thousands of young workers to engage in the assembly lines producing Apple products such as iPhones and laptops.
Nonetheless, since the onset of this year, there has been a surge in speculation surrounding not only Foxconn but also other Taiwanese firms pulling out their operations, instigating significant worry amongst the local population of about 2 million residents.
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