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Evergrande shares lose 25% after wealth management staff detained

New investigation could add to the Chinese property company's woes

A traffic light near China Evergrande Group headquarters in Shenzhen, Guangdong province. The world's most indebted developer is at the center of a crisis in China's real estate sector that has seen a string of defaults since late 2021.   © Reuters

HONG KONG (Reuters) -- Shares of embattled developer China Evergrande Group plunged 25% on Monday after police detained some staff at its wealth management unit, suggesting a new investigation that could add to the property company's woes.

Evergrande, the world's most indebted property developer, is at the center of a crisis in China's real estate sector that has seen a string of defaults since late 2021. The defaults have rattled global markets and sparked fears of contagion. Trading in the company's stock was suspended for 17 months until Aug. 28.

During protests by disgruntled investors at Evergrande's Shenzhen headquarters in 2021, Du Liang was identified by staff as general manager and legal representative of Evergrande's wealth management division.

"Recently, public security organs took criminal compulsory measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co.," police in the southern city of Shenzhen said in a social media statement on Saturday night.

Reuters could not confirm that Du was among those detained, and the police statement did not specify the number of people detained, the charges or the date the detainees were taken into custody.

Evergrande has not responded to requests for comment on the police action.

The stock fell as much as 25%, to HK$0.465, in early morning trade, the lowest in two weeks. It pared losses by 0200 GMT, down 11%, lagging a 0.9% fall in the broader Hang Seng Index.

Last month, the developer posted a January-June net loss of 33 billion yuan ($4.5 billion), versus a 66.4 billion yuan loss in the same period the previous year.

Earlier this month, Evergrande said it had delayed making a decision on offshore debt restructuring from September to next month to allow holders of its debt more time to consider its restructuring plan.

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