Investors in financial products issued by China Evergrande Group protested outside the cash-strapped company’s offices in Guangzhou on Tuesday, with many worried that their returns would be sacrificed to keep real estate projects afloat.
Members of the crowd of roughly 100 people shouted “Evergrande, return our money!”, reprising a chant used by disgruntled investors and suppliers last autumn as the deterioration in its financial position became apparent.
China Evergrande Group shares jumped as much as 10% in resumed trade on Tuesday after the developer said a government order to demolish 39 buildings on the resort island of Hainan would not affect the rest of its project there. But its stock fell later and was up just 1.26% near the close of trading in Hong Kong.
Evergrande’s shares were suspended from trading on Monday and Tuesday morning, pending the release of new information.
The company confirmed late on Monday that on December 30 authorities in Danzhou city, on Hainan Island, ordered it to demolish 39 buildings at Ocean Flower Island, a massive integrated resort development where Evergrande has spent 81 billion yuan ($13 billion) to build over 60,000 homes.
The firm, struggling to repay more than $300 billion in liabilities, also said its contracted sales for 2021 had plunged 39% from the previous year to 443 billion yuan ($69.5 billion).
JP Morgan said in a report early this week that most developers had missed their 2021 sales targets. The investment bank expected yearly sales growth to continue to shrink in the first quarter, due to a very high base and weak market sentiment.
Evergrande did not disclose the reason for the demolition order and provincial authorities in Hainan have yet to clarify the situation. But the company said on Tuesday the order did not involve other plots of land in the project.
“The company will actively communicate with the authority in accordance with the guidance of the decision letter and resolve the issue properly,” it added in the filing.
On its liquidity status in general, the firm said it would continue to actively maintain communication with creditors.
Investors Fear Losing Their Money
On Friday, Evergrande announced a dial-back of plans to repay investors in its wealth management products, announcing that each could expect 8,000 yuan ($1,256) per month in principal payment for three months starting in January, irrespective of when their investment matures.
Once China’s top selling developer but now reeling under more than $300 billion in liabilities, Evergrande had previously agreed to repay 10% by the end of the month when the product matured, without specifying an amount.
The change sparked investor fear that they won’t get their money back.
“I think it’s hopeless, and I’m scared, but if we don’t fight for our rights, that’s worse,” said a retired woman surnamed Du, who was among those outside Evergrande’s offices in the southern Chinese metropolis and said she had invested one million yuan in Evergrande wealth management products.
“The economy’s not good at the moment, these are ordinary people and they need this money for kids, for supporting their parents,” she said.
As of midday, about 60 of those protesting had been contained by security personnel.
Lured by the promise of yields approaching 12%, gifts such as Dyson air purifiers and Gucci bags, and the guarantee of China’s top-selling developer, tens of thousands of investors bought wealth management products through Evergrande.
More than 80,000 people – including employees, their families and friends as well as owners of Evergrande properties – bought products that raised more than 100 billion yuan in the past five years, said a sales manager of Evergrande Wealth, launched in 2016 as a peer-to-peer (P2) online lending platform that originally was used to fund its property projects.
“We worry we will be sacrificed,” said a 34-year-old protester who works in e-commerce and would only give her name as Sophie, for fear of reprisal from authorities.
“It’s okay for younger people like me, we can still earn it back, but I’m worried about the older ones who put everything into this,” she said.
China Evergrande did not immediately respond to a request for comment on the protest or the concerns of the investors.
Protesters and members of messaging groups of people owed money by Evergrande have said they had been told by police not to cause trouble, and had seen their chat groups blocked.
Sophie said police had taken her to the station four times since she joined protests at Evergrande’s headquarters in the nearby city of Shenzhen in September.
“We don’t know what happens to our money but we’re expected to keep quiet, it’s not right,” she said.
• Reuters with additional editing by Jim Pollard
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