Sales in two China Evergrande projects suspended by Chinese authorities

FILE PHOTO: A logo of China Evergrande Group is displayed at a news conference on the property developer's annual results in Hong Kong
FILE PHOTO: A logo of China Evergrande Group is displayed at a news conference on the property developer's annual results in Hong Kong, China March 28, 2017. REUTERS/Bobby Yip

July 20, 2021

HONG KONG (Reuters) – Sales in two developments of China Evergrande Group in a southern Chinese city have been halted by the authorities, government notices show, adding pressure on the developer’s cashflow that has raised concerns in the past few months.

A city housing authority in Hunan province ordered two Evergrande developments to suspend sales on suspicion over a misappropriation of funds, according to separate notices dated July 14. The amount from sales deposited officially was less than total actual sales of 528 million yuan ($81.40 million) recorded so far this year, the statement said.

The statements said Evergrande’s project companies have not taken measures to correct the situation despite multiple notices, so the authorities decided to suspend the sales in the two developments in Shaoyang city until Oct 13.

Evergrande declined to comment when contacted by Reuters.

Shares and bonds of Evergrande and its subsidiaries extended their sharp declines on Tuesday following news the previous day that a Chinese court had ordered a freeze on a $20.4 million bank deposit at the request of China Guangfa Bank Co, though the property firm said the loan was not due until March.

Evergrande shares dropped as much as 16% on Tuesday morning, falling to their lowest since March 2017, while its exchange-traded 6.98% January 2023 bond sank nearly 14% in Shenzhen.

Investor concerns over Evergrande’s liquidity have risen in recent weeks after the firm said in June that some of its project companies’ commercial debt had not been repaid on time, but it was arranging payments.

($1 = 6.4862 Chinese yuan)

(Reporting by Clare Jim; Editing by Jacqueline Wong)