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China Evergrande shares tumble 17% after stock sale falls short

Private placement proceeds reach only half of developer's $1.1bn target

A person involved in China Evergrande Group's private stock sale on Tuesday said, “To call it a struggle to sell the shares is an understatement.”   © Reuters

HONG KONG -- Shares of China Evergrande Group, Asia's largest private-sector debtor, slumped on Wednesday after the company revealed it had sold only half as much stock as it had sought to during a private sale on Tuesday evening.

"The share sale illustrated [that] Evergrande is starting to lose backers," said Warut Promboon, managing partner of Hong Kong-based research company Bondcritic. "Default risk just got higher. Whether it actually defaults depends on the level of government and local bank backing, which has kept the company afloat over the past few years."

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