China Evergrande Group’s Chairman, Hui Ka Yan, has reportedly been placed under police surveillance, raising concerns about the embattled developer’s prospects as it faces the increasing threat of liquidation. Evergrande is the world’s most indebted developer, with over $300 billion in liabilities. The surveillance of Hui comes amidst an ongoing liquidity crisis in China’s property sector, which accounts for a significant portion of the country’s economy. While the reason for the surveillance remains unclear, it is not indicative of formal detention or arrest.
Evergrande’s offshore restructuring plan is also facing challenges, increasing the likelihood of bankruptcy or liquidation. Shares of Evergrande fell 19% following the news, adding further pressure to the troubled developer. Another major Chinese developer, Country Garden, is also facing financial troubles as it confronts a bond coupon repayment deadline. The Chinese property sector is experiencing significant distress, with concerns of further defaults and a potential ripple effect on the broader economy.