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Evergrande property company shares halted as it is told to tear down flats

China's property firms will need to find at least $197bn to pay various bills this month


The Evergrande Plaza in Beijing. Photo: Andrea Verdelli/Getty

The Evergrande Plaza in Beijing. Photo: Andrea Verdelli/Getty

The Evergrande Plaza in Beijing. Photo: Andrea Verdelli/Getty

Shares of Chinese property developers dropped following local media reports that China Evergrande Group has been ordered to tear down apartment blocks in a development in Hainan province.

Evergrande halted trading in its shares.

An index of Chinese developer shares slumped as much as 2.8pc in Hong Kong before closing 1.7pc lower.

A local government in Hainan told Evergrande to demolish 39 buildings in 10 days because the building permit was illegally obtained, Cailian reported on Saturday.

Evergrande gave no details on the trading suspension other than saying it would make an announcement containing inside information.

The Hainan news underscored investor concern that policy makers are unlikely to dramatically ease their crackdown on indebted property companies like Evergrande even as they take steps to ensure stronger developers retain access to funding.

"Even though the Hainan project isn't a significant one in its country-wide strategy, it will have a big impact on confidence," said Kenny Ng, strategist at Everbright Sun Hung Kai Co.

Property firms have mounting bills to pay in January and shrinking options to raise necessary funds.

The industry will need to find at least $197bn (€174bn) to cover maturing bonds, coupons, trust products and deferred wages to millions of migrant workers, according to Bloomberg calculations and analyst estimates.

Contracted sales for 31 listed developers fell 26pc in December from a year earlier, according to Citigroup analysts.

Evergrande's sales dropped 99pc and were 7pc lower than November, the analysts wrote in a note dated Sunday. Sales for Shimao slid 25pc from November.

The slump in developer shares wasn't matched by their bonds.

Chinese high-yield dollar bonds rose as much as 1 cent on the dollar yesterday, according to credit traders.

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Sunac Services' agreement to buy a stake in First Service has been terminated as no formal deal has been entered into on or before Dec. 31, Sunac Services said in Hong Kong stock exchange filing.

Evergrande records a 99pc decline in sales year on year, the steepest among 31 listed developers tracked by Citigroup analysts, and a 7pc drop versus November.

December sales overall were not as bad as feared, Citi analysts including Griffin Chan write in Sunday note, with weighted average for 31 developers down 26pc from a year earlier, and up 23pc from November.

The government of Danzhou, a prefecture-leve l city in the southern Chinese province of Hainan, has asked Evergrande to tear down 39 illegal buildings in ten days, Cailian reported on Sun day, citing a document from the local government.

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