China Evergrande’s shares jump after suspension of trading | Property

Property giant insists government order to demolish 39 buildings on resort island will not affect rest of project there.

China Evergrande Group shares have jumped as much as 10 percent in resumed trade after the developer said a government order to demolish 39 buildings on the resort island of Hainan would not affect the rest of its project there.

The firm, struggling to repay more than $300bn in liabilities, also said its contracted sales for 2021 had plunged 39 percent from the previous year to 443 billion Chinese yuan ($69.5bn).

Its shares were up 4.4 percent to 1.66 Hong Kong dollars at 05:32 GMT on Tuesday in line with the broader Chinese property sector.

Evergrande’s shares were suspended from trading on Monday and Tuesday morning, pending the release of inside information.

JP Morgan said in a report early this week that most developers had missed their 2021 sales targets, although sales still managed an average growth of 3 percent on-year.

The investment bank expected yearly sales growth to continue to shrink in the first quarter due to a very high base and weak market sentiment.

‘Resolve the issue properly’

Evergrande confirmed late on Monday that on December 30 authorities in Danzhou city, Hainan province had ordered it to demolish 39 buildings at Ocean Flower Island, an enormous integrated resort development where Evergrande has spent 81 billion yuan ($13bn) to build more than 60,000 homes.

It has not disclosed the reason for the demolition order and the Reuters news agency could not reach Hainan provincial authorities for comment.

The order did not involve other plots of land in the project, Evergrande said on Tuesday.

“The company will actively communicate with the authority in accordance with the guidance of the decision letter and resolve the issue properly,” it added in the filing.

On its liquidity status in general, the firm said it would continue to actively maintain communication with creditors.