Shares slump after Evergrande executive detained

Shares in a key China Evergrande Group subsidiary slumped on Monday, after a senior executive was detained by police.

In a brief statement to the Hong Kong Stock Exchange, Evergrande New Energy Vehicle Group said its executive director, Liu Yongzhuo, had been "detained in accordance with the law on suspicion of illegal crimes".

It did not elaborate further on the apparent arrest of its vice chair.

Shares in Evergrande NEV initially slumped 23% before trading was halted at the company’s request.

Trading resumed later in the session, and the stock closed down 6%.

Crisis-hit property developer Evergrande borrowed heavily to build a vast portfolio and expand rapidly. It launched Evergrande NEV in 2019, as it looked to diversify beyond real estate.

But with concerns growing over the amount of debt being taken on by China’s real estate companies, Beijing moved to curb the sector, throwing Evergrande into crisis.

Demand has also declined, leaving developers cash poor and struggling to service mammoth debts.

Offshore investors are now demanding Evergrande is wound up.

A proposed restructuring plan, which would have seen Evergrande issue new bonds and swap some offshore debt for stakes in Evergrande NEV and Evergrande Property Services Group, which is also listed in Hong Kong, was turned down by investors.

Last September, Evergrande’s chair and billionaire founder, Hui Ka Yan, was put under police surveillance due to suspicion of unspecified "illegal crimes".