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Shares of Chinese firm Evergrande Real Estate rose on Monday morning after the chairman of the ailing firm said the company would focus on its growing electric vehicle unit in the future rather than its core real estate business in the future. difficulty.
The company, which has approximately $ 305 billion in debt, managed to avoid a costly default last week by finding the cash to pay bond interest at the last minute.
Shares of Evergrande have risen as much as 6% so far in Monday’s trading, while shares of its electric vehicle unit – China Evergrande New Vehicle Energy Group – have jumped 17% at one point. given after the president of Evergrande said he would make the new vehicle his company. main activity, although both companies subsequently lost some of their earnings and Evergrande shares are currently stable.
According to state media, Hui Ka Yan said on Friday that electric vehicles would surpass the company’s previous real estate target over the next decade, a strategy that appeared to prove popular with investors.
Evergrande’s automotive business was founded in 2019, but has yet to showcase any of its planned models or sell a single car.
Evergrande, which is China’s second-largest real estate developer, raised alarm bells in global financial markets in September when he announced that he may not be able to pay his many creditors, whether they are home buyers, construction contractors, banks and offshore investors.
On Friday, it was reported that the company wired an $ 83.5 million bond interest payment it missed in September.
Evergrande announced on Sunday that it had resumed work on 10 projects in six cities, including Shenzhen. Some constructions had been halted during the summer due to late payments to suppliers and contractors.
However, concerns in Evergrande have not completely subsided, although Chinese state media reported on Monday that any spillover of the country’s real estate debt into the financial sector is controllable.
In a commentary published by the Xinhua News Agency on the Chinese Economy, including information attributed to “relevant departments” and “persons of authority”, it was reported that real estate companies were potentially facing payment default. of their debts due to mismanagement and failure to adapt to changes in the market.
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