Evergrande, Property Management Unit Share Trading Halted By

(Bloomberg) — Trading of China Evergrande Group shares was suspended in Hong Kong along with those of its property management unit, as the property giant contends with a deepening cash crisis. 

No reason was given for the halts, which also affect all structured products relating to the company, a stock exchange filing showed on Monday morning. Hopson Development Holdings Ltd. plans to acquire a 51% stake in Evergrande Property Services Group Ltd. for more than HK$40 billion ($5.1 billion), Cailian reported, citing unidentified people.

Evergrande shares have plunged 80% this year, and its bonds have tumbled to levels that suggest investors are bracing for a default. With more than $300 billion in liabilities, the developer has been trying to sell assets in a bid to raise cash. The saga has roiled financial markets in recent weeks on concern that it may spread to hurt the economy and financial system.

The trading suspension may be related to a major asset disposal or capital restructuring, said Patrick Wong, a Bloomberg Intelligence analyst. Weak property sales “may accelerate its asset disposal,” he said.

A representative for Hopson Development declined to comment in a text message.

Evergrande Property Services is the Chinese conglomerate’s most valuable business, with a market value of about HK$55 billion, surpassing the parent company’s HK$39 billion. Evergrande said in September that it had been “actively exploring” sales of parts of the unit, along with its electric vehicle arm, though no material progress had been made. 

Evergrande’s 8.25% dollar bond due March 2022 was indicated 0.2 cent higher on the dollar at 25.4 cents, according to Bloomberg-compiled data. Mainland China markets are closed for a national holiday. 

While Evergrande’s onshore bonds suffered regular halts last month, trading in the company’s Hong Kong shares had until now been continuous throughout its latest debt woes. Monday’s filing didn’t specify whether Evergrande requested the suspension, though it’s unlikely the stock exchange would mandate a halt without saying it had done so. Under Hong Kong listing rules, an issuer must demonstrate “exceptional circumstances” when requesting a trading halt and has to publish a public update as soon as possible.

Evergrande last requested a stock trading suspension in October 2016, according to data compiled by Bloomberg. Shares of its property unit were halted in January, when it announced it had purchased a rival firm.

Went Public

The property services business went public in December, raising $1.84 billion in…