China Evergrande New Energy Vehicle Group announced on Monday that its vice chairman and executive director, Liu Yongzhuo, has been detained, causing a sharp decline in the company’s stock. Liu is held on suspicion of “illegal crimes,” though specific details were not provided.
The stock of Evergrande’s electric vehicle arm (China Evergrande New Energy Vehicle Group) plummeted by as much as 23% when trading resumed after the announcement. Shares were initially suspended from trading in the morning session until the statement was released. The stock fell to a low of HK$0.32 but later recovered, currently showing a 1.2% decline.
This development adds to the challenges faced by China Evergrande Group, the embattled property developer and parent company of the electric vehicle unit. Evergrande Group’s founder and chairman, Hui Ka Yan, has also been under investigation for suspected crimes, according to a filing in late September. The parent company holds the title of the most indebted property developer globally.
The recent decline in Evergrande New Energy Vehicle Group’s stock follows a turbulent period for the company, including the cancellation of plans to sell shares to U.S.-listed NWTN, leading to an 18.6% drop in the first week of 2024. The situation raises concerns about the broader impact on Evergrande and its subsidiaries as regulatory scrutiny and financial pressures persist.