Developer China Evergrande’s Hong Kong unit surges by 66.2pc after investment in electric car maker FF
But analysts say price surge is speculative and will not last long
Shares in Evergrande Health Industry Group, a Hong Kong listed entity under China Evergrande Group, the country’s biggest property developer, closed at HK$7.66 on Tuesday, pushing its market cap to an all time high of HK$66.2 billion.
The company, which has businesses in health care-related property development and medical services, surged by 66.2 per cent in Hong Kong, after it announced a HK$6.7 billion (US$854.85 million) capital injection to rescue troubled electric car maker Faraday Future (FF).
The company said in a stock filing after close of trade on Monday it had agreed to fully acquire Season Smart, which controls a 45 per cent stake in a joint venture it set up with FF last year, making Evergrande Health the electric car maker’s biggest shareholder.
Some analysts said the price surge was speculative and would not last long. “I think it’s just market speculation and excitement – finding something to buy when most stocks are not doing well. I think it’s a typical event-driven one or two-day shoot up pattern. Don’t think it can last and will fall back,” said Kevin Leung, executive director of investment strategy at Haitong International Securities.
“It is too early to tell how fundamentals of Evergrande Health will change because of this. And FF has always been a drag on all parties that have previously been involved,” he added.
FF’s founder, troubled Chinese entrepreneur Jia Yueting, and other original shareholders, will retain a 33 per cent stake, while the remaining 22 per cent will be held by employees.
