China Evergrande Group's Stock Surges Over 40% as Trading Resumes Amid Founder's Legal Troubles

China Evergrande Group witnessed a remarkable surge of more than 40 percent in its shares as trading resumed, instilling newfound confidence among investors. This resurgence comes in the wake of a police investigation into the company's billionaire founder, suspected of undisclosed crimes.

Source:https://bnn.network/finance-nav/stock-markets/china-evergrandes-shares-skyrocket-amid-investigation-of-founder/

China Evergrande Group witnessed a remarkable surge of more than 40 percent in its shares as trading resumed, instilling newfound confidence among investors. This resurgence comes in the wake of a police investigation into the company's billionaire founder, suspected of undisclosed crimes.

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The troubled property conglomerate's stocks experienced an impressive ascent, soaring by as much as 42 percent during early Tuesday trading. Even Evergrande Property Services Group Ltd., a subsidiary, saw its shares rise by nearly 14 percent in response to the positive turn of events.

Evergrande made a formal request to resume trading on the Hong Kong stock exchange, affirming that there were no additional material disclosures required. The suspension of the company's shares and those of its property services unit last Thursday, following news of its founder's detention, was lifted.

Evergrande has been at the epicenter of a protracted property crisis, adversely impacting China's economy and eroding confidence in the housing market. The company faces a critical hearing on October 30 in a Hong Kong court concerning a winding-up petition, which could potentially lead to liquidation. In August, the company's shares only resumed trading after a 17-month hiatus, plummeting by 87% due to mounting losses and postponed meetings with creditors.

Willer Chen, a senior research analyst at Forsyth Barr Asia Ltd., commented on the unpredictability of Evergrande's shares, saying, "Evergrande shares are really volatile and always full of surprise moves. I'm not sure who will buy it up under this situation."

Last week, Chinese authorities notified Evergrande that Chairman Hui Ka Yan was subjected to "mandatory measures" in connection with "suspicion of illegal crimes." However, specific details regarding these measures or the alleged crimes remain undisclosed. The Wall Street Journal reported that Chinese authorities are probing whether Hui attempted to transfer assets offshore during the company's struggles to complete unfinished projects.

In a separate filing by Evergrande's Property Services unit, it was stated that "the operations of the company are normal." Nevertheless, this assurance was conspicuously absent from the China Evergrande Group's filing, which advised caution for holders and prospective investors considering the stock.