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Report gives property market renewed jitters

Irish Times
A labourer works at a construction site in Beijing: fears that China's property market is heading for a hard landing have eased recently. Photograph: Jason Lee/Reuters

A labourer works at a construction site in Beijing: fears that China's property market is heading for a hard landing have eased recently. Photograph: Jason Lee/Reuters


Nervous investors were even more jittery last week after a report by the US-based short-seller Citron Research said China’s second-biggest property company by sales, Evergrande, was “insolvent”, “fraudulent” and a Ponzi scheme.



In its report, entitled Deception on a Grande Scale, Citron Research describes Evergrande as “essentially an insolvent company that has consistently presented fraudulent information to the investing public”.

It said bribery, excessive spending and off-balance sheet transactions were the foundation of Evergrande’s financials.

The report badly affected Evergrande’s shares, knocking €800 million off the value of the company on the day the report was published.

Evergrande said the accusations were untrue, and that it was organising a legal team to defend itself.

It was also sticking to its forecast for annual sales of 80 billion yuan (€10 billion).

The focus of the report’s ire is chairman Hui Ka Yan, who owns 63 per cent of Evergrande.

The report said the company has been borrowing large sums of money, then using the funds to pay off the previous round of financing, all the time underwritten with personal guarantees from Hui.


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