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Evergrande Group, a China-based real estate company, saw the shares of its electric vehicle unit, Evergrande NEV, drop sharply on Monday, Jan. 8, after it was revealed that its vice chairman, Liu Yongzhuo, has been detained by the police.
Evergrande Confirms the Executive’s Detainment
According to CNBC, Evergrande NEV’s shares plunged by 23% shortly after the story of Liu’s arrest was reported. In its recent filing with the Hong Kong exchange, the company announced it has “learned that its executive director Mr. Liu Yongzhuo has been detained, in accordance with the law on suspicion of illegal crimes.”
While it revealed the arrest of its executive chairman, Evergrande NEV did not share additional details about the subject. It did not mention the type of crimes that Liu is involved in nor the date when he was arrested and held in police custody.
Negative Impact of the Chairman’s Arrest
Liu is now under criminal investigation, and aside from the negative impact of this incident on Evergrande’s stock price, Reuters reported that the detainment is also likely to hurt the EV maker’s parent company, China Evergrande Group, a real property firm.
On top of this, Evergrande Group’s chairman and founder, Hui Ka Yan, is also under investigation for suspected crimes. These troubles are big stumbling blocks for the group and its affiliates, so they are bracing for possible outcomes that these developments may bring.
Meanwhile, Evergrande NEV’s shares were suspended from trade in Monday’s morning session pending the statement and dropped by as much as 23% in the afternoon.
Photo by: Nrya/Wikimedia Commons(CC BY-SA 4.0)
