Evergrande Auto shares nosedive - funds frozen

Yesterday was probably the blackest day so far in the current development around the Evergrande Group. Not only the shares of the Auto Division are in a nosedive. An Evergrande subsidiary's funds were frozen following a court order. It can hardly be assumed that the development will remain without further damage. For Trollhättan, too, the signs of concern are red.

Evergrande Spring - mineral water for the stock market
Evergrande Spring - mineral water for the stock market

Exacerbation of the crisis

The permanent one intensification The situation around the Evergrande Group was already the subject of a detailed article yesterday with background facts. The situation worsened on Monday.

A court in Jiangsu Province did so Freeze an account of the Evergrande daughter Hengda. In the past few months, Hengda Real Estate had repeatedly let deadlines for paying commercial invoices pass without making a payment. The Evergrande Group is said to have financed itself on the gray capital market with around US $ 200 billion, which is a thorn in Beijing's side. Yesterday the court froze a balance equivalent to US $ 20 million.

A heavy blow for Evergrande. Because the company is said to have never missed a payment date. The court's action increases pressure and further damages investor confidence in the group.

Evergrande Group - shares in descent
Evergrande Group - shares in descent

The sedative pill fails

Last Friday, Evergrande promised the visibly troubled investors a special payment as a sedative pill. In the meantime, however, it is clear that it will not be about paying out money. Evergande is considering paying shareholders with shares in other companies in the group. Shares in Evergrande Auto (HK 0708) would be possible. The stock market reacted immediately, the shares continued to plummet.

Evergrande Auto - the stock is falling
Evergrande Auto - the stock is falling

Evergrande shares on nosedive

To round off the day, the media made the Indictment of a senior Evergrande manager in a Hong Kong court. It is about attempted rape and other misconduct.

The bundle of bad news sent stocks south as well. The automobile share (HK 0708) lost 19,10%, the notes of the parent company (HK 3333) were down 16,22% at the close of the stock exchange.

Yesterday will hardly remain without consequences. Red lines have been crossed and Evergrande are obviously picking up speed to solve the problems. The IPO of the mineral water company is currently being prepared. In China, “Evergrande Spring” is known as “Concrete Water”, the parent company holds a 49% stake. Now the shares are to go public in Hong Kong brought become. Evergrande expects this to generate revenues of some US $ 100 million. It remains to be seen whether this will be sufficient to solve the problem at hand.

What could happen to the European holdings of the Evergrande Group is also unclear. The Evergrande crisis will affect them too. What will be decisive will be what Beijing wishes for Evergrande in the future.

With images from Yahoo Finance and Evergrande Spring

8 thoughts on "Evergrande Auto shares nosedive - funds frozen"

  • blank

    Thanks for these two China articles!
    Great insights that would otherwise not have been possible for me. Thanks.
    Forecast? It will certainly be difficult ... but China is “special” in the reactions.
    It remains exciting anyway. Didn't buy any shares in Evergrande Auto… 😉

  • blank

    If it wasn't about the former Saab factory, I wouldn't care. So you can only keep your fingers crossed. In principle, Volvo was lucky with Geely (is that really the case?) And Saab was just unlucky with the Chinese. Maybe it will still be good ... ??

  • blank

    Quite violent and difficult to guess where this will lead? Does Evergrande pay on time in the auto business and how is it in Sweden? Is NEVS already on the gums again, you will hardly have your own income?

    Everything difficult. Fits perfectly this week 😉

  • blank

    Does the automotive world really still need new start-ups in the field of electric cars?
    Every vehicle manufacturer is on the way to electromobility, in my opinion total madness, all the electricity for the vehicles has to be produced somewhere.
    Politicians and the automotive industry think or research far too little about other alternatives, for which electromobility is apparently the panacea.

  • blank

    It would be best if NEVS in Trollhättan were sold to a European investor / car manufacturer! However, that wouldn't bring us back a real SAAB with a turbo engine either. Almost everyone only thinks in electrical boxes!
    INEOS shows how it can be done better with the Grenadier. They should have bought the plant in Trollhättan once. But they bought the Smart Werk!
    Evergrande is not a car manufacturer for me and they probably won't sell anything in Europe either ...... at SION the same!
    But big compliments to Tom! Without him and the SAABblog you wouldn't hear anything from Evergrande. SION was featured in Autobild at least a few weeks ago.

    • blank

      Thank you Christoph! They had the chance to become European in THN 2012 and again later. But the train should have left. The tendency is to close or downsize works. E-cars are less complex to produce than combustion engines. And there are already enough contract manufacturers with Valmet and Magna. However, hope dies last.

  • blank

    This is exciting.

    Too big to fail is obviously relative in China. But why not?
    With the breaking up of corporations and the realization of bankruptcy assets, China has had ample and positive experience in all corners of the world. If necessary, they can also do this internally and at national level.
    Then another corporation is building the Hengchis - maybe one whose top management is even closer to the political leadership?

    Money would not be destroyed in the process. Shifted into other hands, however. A new favorite's stocks would surely skyrocket. Who knows what's going on right now? ? ?

    I only know that the “free market” and its constellation with the political leadership is absolutely unique worldwide and has not yet been fully understood by anyone.

  • blank

    It is a miracle that Evergrande is so deeply in debt and that the Chinese authorities have not reacted sooner. Hopefully it's not too late now.
    Evergrande has always been “big talk” for me, never familiar
    But again, the business in Trollhattan is getting into unsafe waters again.
    Still a shame that Geely was not interested in taking over Saab at the time.

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