Fleeing investors have created huge losses for the real estate giant Evergrande Group over the past two weeks, driving down the market value of four of its affiliates by HK$167 billion (US$21.5 billion), following reports that the indebted Chinese developer was entangled in financial problems.

Shares of Evergrande Group fell to HK$11.22 at the close of trading in Hong Kong on Friday, down 60% from a high last July of HK$28. Its automobile arm plummeted to HK$32.3 on Friday, less than half of its HK$72.25 in February.

Evergrande Property, which hit a high of HK$19.1 early this year, has dropped 53% to Friday’s close of HK$8.9.

Evergrande Group was dealt a blow late last month when mainland Chinese media reported that the most indebted developer in the country was being probed by regulators over a potential deal with Shengjing Bank. The group reportedly has also failed to pay service fees to suppliers and has offered drastic discounts in its apartment sales.

In a statement last week, Evergrande admitted that it has a few overdue payments, saying its big discounts were limited only to some leftover flats. It also said the deal with Shengjing Bank was in line with laws and regulations.

According to foreign media reports, regulators have asked mainland banks to stress test their exposure to Evergrande. This came as Evergrande chairperson Xu Jiayin vowed to reduce the company’s debt to below 600 million yuan (US$93.69 million) by the end of June.

But concerns linger over whether Evergrande can achieve its debt-cutting targets, because the developer is barred from interest-bearing borrowings under tightened restrictions announced by Beijing last year.

Philip Tse, a director at the financial firm BOCOM International, said a large-scale closure of Evergrande’s businesses was unlikely because the group could still acquire funds from its other business lines including mineral water, tourism and its online trading platform for vehicles and homes.

However, Evergrande may need more time than it expected to achieve its debt-cutting targets, Tse said.

Click here for Chinese version

---------------------------------

Apple Daily’s all-new English Edition is now available on the mobile app: bit.ly/2yMMfQE

To download the latest version,

iOS: bit.ly/AD_iOS

Android: bit.ly/AD_android

Or search Appledaily in App Store or Google Play