Shares of New Energy Vehicle Group, a subsidiary of China's Evergrande Group, plunged 26% in early trading in Hong Kong, after it suffered a major cash shortage and canceled plans to list in Shanghai.
According to Arab Net, the company has suspended payment of some of its operating expenses, including some workers' salaries and supplier bills for equipment, raising fears that it will not be able to Production of more cars.
In a move to reduce the impact of the parent company's debt crisis on the markets, two local governments in China have asked Evergrande to transfer its sales proceeds from real estate and residential projects to their government account to protect the interests of investors .
Moody's had said that China would avoid the financial and social impacts of the Evergrande problems, but that the economic impacts would be felt in a number of sectors.
Evergrand is saddled with more than $300 billion in debt, from years-long acquisition thirst, including in the electric car sector, where its subsidiary was previously described as a rival. For the American company Tesla.
There are fears that a default of tens of millions of dollars in interest payments could lead to a chaotic collapse of the company, China's second-largest real estate developer, with Significant repercussions for the local economy and the rest of the world.
The group, which claims to employ 200,000 people and indirectly create 3.8 million jobs in China, said it was trying to avoid a bankruptcy that could reverberate around the world.
While the government has not yet decided to bail out the troubled company, analysts say Evergrande may have to undergo a state-led restructuring similar to previous moves to bail out the battered giants. Like Anbang and HNA Group.
