Troubled Chinese real estate developer Evergrande suspended trading in Hong Kong on Monday.
In a filing to the Hong Kong stock exchange, Evergrande said trading in the company's shares was halted pending the release of "inside information." The company did not elaborate.
Evergrande, China's second largest property developer, has been struggling to avoid defaulting on more than $300 billion in total liabilities.
It has fueled fears of a possible collapse that could cascade through the Chinese economy and rattle world financial markets. Some analysts say it could be China's "Lehman moment," referring to when the U.S. investment bank Lehman Brothers went bust in 2008 and played a role in triggering the Great Recession.
According to Reuters, Evergrande missed new coupon payments worth $255 million due last Tuesday, although both have a 30-day grace period.
"In light of the current liquidity status...there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations," Evergrande said in a statement after it received a demand to pay creditors about $260 million last month.
The news prompted government officials in China's Guangdong province, where Evergrande is based, to meet with the company's chairman, Hui Ka Yan. After the meeting, the provincial government agreed to send a "working group" to the company to oversee risk management, strengthen internal controls and maintain normal operations.
Last week, Evergrande also dialled back plans to repay investors in its wealth management products. The company said each investor in its wealth management product could expect to receive $1,257 (8,000 yuan) per month as principal payment for three months irrespective of when the investment matures, Reuters reported.
Meanwhile, China's central bank, the People's Bank of China, has sought to reassure the market that financial risks from the company's debt crisis could be contained.
"Evergrande's problem was mainly caused by its own mismanagement and break-neck expansion," the Bank said last month.
But trust in the Bank's statements hangs on the its ultimate intentions, Scott Kennedy, trustee chair in Chinese business and economics at the Center for Strategic and International Studies (CSIS), told Newsweek in October.
"If it's about reasserting the role of the state, across the economic system. If they give that message, then it's entirely believable," he said.
"If they're trying to provide reassurance that there can be a narrower range of assets that the state authorities guarantee, and that the market will take on a larger role for pricing risk and managing the complications from investments that go awry, I think that is that is a harder sell."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Khaleda Rahman is Newsweek's Senior News Reporter based in London, UK. Her focus is reporting on abortion rights, race, education, ... Read more
