Shares of China Evergrande Group’s electric vehicle unit slump

Shares of China Evergrande Group’s electric vehicle unit are collapsing in Hong Kong, wiping about HK$622 billion (US$80 billion) from what was the property developer’s most valuable listed asset.

China Evergrande New Energy Vehicle Group Ltd. sank as much as 22 percent Thursday after its parent said the unit will post a net loss of 4.8 billion yuan (US$740 million) for the first half.

The EV business was worth about US$87 billion at its April 16 peak, more than Ford Motor Co. and almost four times more valuable than China Evergrande itself at the time. Its shares are now down 92 percent since, the worst performance in the Bloomberg World Index and lagging even China’s tutoring stocks.

Evergrande’s subsidiaries are being punished on concern the world’s most indebted developer will need to sell assets at a steep discount amid mounting pressure from Beijing. Shares of listed businesses — including the 65 percent stake it owns in Evergrande NEV — are the most liquid if Evergrande needs to generate cash quickly. Evergrande in May raised $1.4 billion from the unit in a heavily-discounted share sale.

Evergrande said earlier this month it was in talks with “several independent third-party investors” to sell stakes in the electric vehicle and property services subsidiaries. It’s selling a Hong Kong development project at a loss, people familiar with the matter said this week.

More than 66 million China Evergrande NEV shares had changed hands as of 11.46am on Thursday, about five times this year’s average for a full day. –Bloomberg

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