China Evergrande New Energy Vehicle Shares Plunge After it Pulls Plug on CNY Shares Issuance

By Gina Lee

Investing.com – China Evergrande New Energy Vehicle Group Ltd.’s shares after it said on Saturday that it is abandoning a plan to issue CNY shares on Shanghai’s Science and Technology Innovation Board.

China Evergrande Group, HK:’s electric vehicle unit warned it that the future of its business is in doubt unless they provide quick cash injections.

China Evergrande New Energy Vehicle’s Hong Kong shares tumbled 10.31% to HK$2 ($0.26) by 12:39 AM ET (4:39 AM GMT), after plunging up to 26% and hitting HK$1.66 earlier in the session. China Evergrande shares remained stable at HK$2.36.

The warning, issued after the market closed on Friday, was the latest sign that the property developer’s liquidity crisis is spreading to other business units.

Investors are still concerned that China Evergrande’s collapse could lead to a worldwide economic contagion.

“I think the markets have priced in that on the balance of probabilities, the shock and awe are over,” IG Markets analyst Kyle Rodda told Reuters.

“Markets are really just expecting from here on in, a company that is doomed to failure but one which won’t be allowed to result in major risks within the Chinese financial system, or that contagion won’t pervade global markets.”

China Evergrande missed a payment deadline on a dollar bond during the previous week and was granted a 30-day grace period. On Sep. 29, China Evergrande will make $47.5 million in interest payments on the 9.5% March 2024 dollar bond.

The company currently has $305 billion in liabilities and is trying to find funds to repay it. A meltdown that has significant economic consequences, a controlled collapse or a Chinese bailout are all options.