Wild Swings for China Evergrande Unit Stocks After Liquidation Order

Dow Jones01-30

By Jiahui Huang

Shares of China Evergrande's units saw volatile trade a day after the Chinese property giant was ordered to turn over its assets to liquidators.

Evergrande Property Services' shares rose as much as 10% in early Hong Kong trade Tuesday before ending the morning session down 1.3% while China Evergrande New Energy Vehicle Group shares went from a loss of 13% to a gain of 14% before ending the morning 4.8% higher.

Trade in both China Evergrande units resumed Tuesday after having been halted in the wake of its parent's court proceedings a day earlier. Trade in China Evergrande shares remain halted for a second day.

Even though shares of the companies are down 83%-93% over the past 12 months, investors are concerned their value could fall further as China Evergrande may have to sell its offshore assets as well as its listed subsidiaries.

Investors are looking toward China Evergrande's liquidation plan. "Facing such big uncertainty, some stakeholders probably choose to sell," said Sonija Li, Maybank's head of retail research.

Some speculators may be betting that China Evergrande's liquidation progress goes smoothly, and that could be supporting China Evergrande New Energy Vehicle's shares, Li added.

In the event that China Evergrande sells the units and prioritizes delivering homes to existing buyers, "it could mean other creditors will barely have anything to recover," said Shujin Chen, Jefferies head of China financial and property research.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

January 30, 2024 00:10 ET (05:10 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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