China Evergrande shares firm after chairman vows full construction, no fire sales

Shares of China Evergrande Group jumped on Thursday after the chairman of the world's most indebted property developer said it would resume construction and ruled out fire sales. 

Evergrande, with more than US$300 billion in liabilities, including nearly US$20 billion international bonds deemed to be in default, has been struggling to repay creditors, suppliers, and deliver homes. 

Shares gained as much as 7.2 percent to HK$1.79, their highest since Jan. 25. That compared with a loss of 0.3 percent in the benchmark Hang Seng Index and a rise of 2.5 percent in Hang Seng Mainland Properties Index. 

China Evergrande needs to clear its debt by fully restoring construction and sales activities and not by selling assets on the cheap, its chairman, Hui Ka Yan, told an internal meeting, vowing to complete half of pre-sold homes this year. 

Hui said the firm aimed to fully resume construction work across China this month, compared with 93.2 percent at the end of last year, with a goal of delivering 600,000 apartments in 2022. 

Evergrande started having trouble repaying its suppliers and creditors in June as a bloated real estate sector suffered from deleveraging, triggering massive selloffs in its shares and bonds. 

During the early days of the firm's debt crisis, its CEO, Xia Haijun, cashed out his bond holdings for a total of US$128 million between July 27 to August 17 at prices of 35.88 cents to 52.38 cents, stock exchange filings on Wednesday showed. 

The prices compared to Evergrande's bonds trading at around 15 cents on Thursday. 

The bonds involved were 8.75 percent notes due 2025, 11.5 percent notes due 2023 and 11.5 percent senior notes due 2022. 

(Reuters)