Evergrande employees arrested

HONG KONG

Shares in Chinese property giant Evergrande plunged in Hong Kong yesterday, following the arrest of several of the debt-ridden company's employees in China.

The drop comes two days after police in the southern Chinese city of Shenzhen said in a statement that several employees of Evergrande's financial subsidiary, Evergrande Wealth Management, were arrested.

The authorities did not specify the number of employees or the charges against them.

The statement called on the public to report any cases of suspected fraud.

Evergrande, the world's most-indebted property developer with an estimated debt of $328 billion (307 billion euros) at the end of June, has been at the centre of China's deepening market crisis, raising fears of a global spillover.

Once a star player in an industry key to China's economic growth, Evergrande's enormous debt has been seen by Beijing as an unacceptable risk for the country's financial system.

Authorities have gradually tightened developers' access to credit since 2020, and a wave of defaults have followed -- notably that of Evergrande.

On Friday, China's national financial regulator greenlighted a takeover of Evergrande's insolvent insurance subsidiary, Evergrande Life Insurance, by new state-owned vehicle Haigang Life Insurance.