Evergrande stock fluctuates as trading resumes amid a chairman investigation

China Evergrande shares increased by as much as 42% in choppy trading on Tuesday, days after the troubled developer said its billionaire founder was under investigation for an unspecified crime.

Following news that Hui Ka Yan, the company's chairman and founder, was being watched by the police, Evergrande's stock was suspended last Thursday. Later, the developer with the largest debt revealed in a statement that Hui was under investigation.

Evergrande issued a statement late on Monday saying, "At this time, there is no other inside information pertaining to the company that needs to be disclosed.

The stock has lost over three-quarters of its value since August and was last trading up 15.6% at HK$0.37.

According to First Shanghai Securities' chief strategist Linus Yip, "trading resumed may have fueled speculation that there may be progress in restructuring."

The once-dominant Chinese developer has been enmeshed in a debt crisis that took a turn for the worse in late 2021 when it failed to pay its obligations under its offshore debt, sending tremors through international markets amid worries of contagion.

When it was revealed last week that its main office in China was unable to issue new debt due to an ongoing investigation, the developer's restructuring plan was further complicated.

Evergrande has until today to win the support of its creditors for restructuring its offshore debt.

The developer has been served with a court petition for liquidation if it does not submit a new debt revamp plan by the end of October, according to a report published by journalists last Tuesday.

Following the most recent setbacks, some analysts claim that it now appears likely that the debt restructuring plan will fail and that there are rising chances that the company will be liquidated.