Evergrande suspends trading in Hong Kong

Ailing Chinese property developer Evergrande suspended trading in Hong Kong on Monday as the heavily indebted company grapples with an ongoing property crisis.

Evergrande announced in a message to the Hong Kong Stock Exchange that the trading stop was in anticipation of an "announcement with inside information", but without further elaboration. The company's total debt is around $ 300 billion, and analysts have been wondering for months whether a collapse could spark a wider crisis in China's real estate market that would harm homeowners and the financial system in general. The US Federal Reserve warned last year that problems in China's real estate market could damage the global economy. In December, Fitch Ratings stated the company had defaulted on its debt, a downgrade that the rating agency said reflects Evergrande's inability to pay interest due earlier that month on two dollar-denominated bonds. The company's stocks faltered last week after further deadlines for paying debts passed without any sign of the company meeting its commitments, despite reportedly having a 30-day grace period for paying that debt has. (Fitch downgraded when Evergrande failed to make payments after the grace period had expired). Evergrande did not immediately respond to a request for comment on its decision to suspend shares on Monday.

As the company's financial troubles mount, there was some positive news to report last month: The company had made initial progress in resuming construction. The company's chairman, Hui Ka Yan, said no one at the company should "lie flat" and promised to deliver 39,000 units in December. That number was a huge leap from the fewer than 10,000 units the company had shipped in the previous three months. And there are signs that the Chinese authorities are taking action to contain the effects of the company's downward spiral and guide it through restructuring its debt and operations. Evergrande announced in December that it would set up a risk management committee, including government officials, to focus on "mitigating and eliminating" future risks. Members of the committee include senior officials from large state-owned companies in Guangdong, as well as a senior officer of a large central government-owned debt collector. The People's Bank of China also announced it would inject $ 188 billion into the economy, apparently to counter the slump in the real estate sector, which accounts for nearly a third of China's GDP.