China Evergrande's stock has plunged about 60% from last year’s high, while a key dollar bond is near its lowest level since April 2020.
CHINA Evergrande Group’s favored tactic to squeeze bearish speculators is to repurchase shares, mopping up liquidity in the stock and driving up its price. Unfortunately for the company and its billionaire founder, that strategy is about to hit a wall.
The property developer’s stock free float -- or the amount of shares readily available for trading -- will fall to 23.02% of the issued stock after Friday’s buyback, according to data compiled by Bloomberg.
It’s approaching the 22.04% free-float minimum requirement for Evergrande, as part of Hong Kong stock exchange rules aimed at avoiding stagnant trading.
Chairman Hui Ka Yan owns almost 77% of the outstanding stock through companies controlled either by him or his wife, according to the company’s 2020 annual report.
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