The shares were suspended pending an announcement containing inside information, Evergrande said.
A local government in Hainan told Evergrande to demolish 39 buildings in 10 days because the building permit was illegally obtained, online news site Cailian reported on Saturday. The project is on artificially built islands off the coast of Hainan.
An index of Chinese developer shares slumped 2 per cent, with Sunac China Holdings and Shimao Group Holdings tumbling more than 9 per cent.
Chinese property companies have mounting bills to pay in January and shrinking options to raise necessary funds.
The industry will need to find at least $197 billion to cover maturing bonds, coupons, trust products and deferred wages to millions of migrant workers, according to Bloomberg calculations and analyst estimates.
The government of Danzhou, a prefecture-level city in the southern Chinese province of Hainan, asked Evergrande to tear down 39 illegal buildings in ten days, Cailian reported on Sunday, citing a document from the local government.
The report quoted the document, which was dated December 30, as saying that the Danzhou government said the tower blocks need to be dismantled as an illegally obtained permit for the buildings had been revoked.
Evergrande did not immediately respond to a request seeking comment and calls to Danzhou authorities went unanswered on a public holiday in China on Monday.
Shares in Shimao Group Holdings dropped 5.9 per cent to hit their lowest since March 2009 after the property company missed its targets.
“Risks to Shimao’s liquidity could extend into 2022 as a parade of unfavourable media headlines threatens to keep potential buyers at a distance,” Bloomberg Intelligence analyst Kristy Hung wrote in a note on Monday.
The company missed its lowered 290bn yuan ($45.7bn) sales guidance for 2021 by 7 per cent, with December’s sales tumbling 68 per cent year over year and by 25 per cent sequentially, to 12bn yuan, according to preliminary data by the China Real Estate Information Corporation.
The company gave no reason for the trading suspension.
China Evergrande on Friday dialled back payment plans on billions of dollars of overdue wealth management products as its liquidity crisis showed little sign of easing.