• Evergrande is making a “major transaction” in a move to manage its debt burden
  • With liabilities of $300 billion, and a raft of illiquid assets, markets fear collateral damage

Shares of China Evergrande Group were halted in Hong Kong trading on Monday, according to an announcement from the company, pending details of a “major transaction”. The reference is to a sale of a majority stake in its property management business, Evergrande Property Services Group, for more than $5 billion, according to Reuters.

The news ups the pace of Evergrande’s asset sales following last week’s divestment of a 20% stake in Shengjing Bank, raising $1.5 billion. Chinese media reported Monday that Hopson Development, another Chinese property developer, was the buyer of a 51% stake in the Evergrande property management business. Trading of Hopson and Evergrand Property Services Group shares were also both suspended in Hong Kong.

China’s central government is involved in the unwinding of the real estate giant, as Evergrande faces potential default on several bond interest payments later this month.

The former chairman of Hopson is Chu Mang Yee, a billionaire former government official who, Bloomberg reports, is known in Chinese media circles as an “invisible magnate” due to his relatively low-profile. His daughter Chu Kut Yung is the current Hopson chair, and the family has a net worth north of $6 billion.

Bloomberg, citing “people familiar with the matter”, notes that dollar-denominated bonds due today, totaling $260 million and issued by a joint venture of Evergrande’s Hengda Real Estate subsidiary, are guaranteed by Evergrande. If left unpaid, Evergrande would be in default. Unlike the interest payments the company missed last week, there is no 30-day grace period.

The National Day Golden Week string of holidays are currently being observed in China from October 1 to October 7.

European markets are down roughly -0.1%, and US markets are set to open lower in New York, with S&P 500 and Nasdaq futures trading between -0.35% and -0.5% just over an hour before the open.

Bitcoin has been ranging since a strong move up on Friday, between about $47,100 and $48,800, down about 1.3% in the past 24 hours.

  • Macauley was an editor and content creator in the professional chess world for 14 years, prior to joining Blockworks. At Bucerius Law School (Master in Law and Business, 2020) he researched stablecoins, decentralized finance and central bank digital currencies. He also holds an MA in Film Studies; film credits include Associate Producer of the 2016 Netflix feature documentary, "Magnus" about World Chess Champion Magnus Carlsen. He is based in Germany. Contact Macauley via email at [email protected] or on Twitter @yeluacaM