(Yicai Global) Sept. 23 -- The stock of Chinese Estates Holdings, the second-biggest shareholder in China Evergrande Group, gained after the firm said it had pared its stake in the debt-ridden property developer and may sell all of its holding.

Chinese Estates [HKG:0127] ended 5.5 percent higher today at HKD2.30 (29 US cents), after earlier soaring as much as 10 percent. The benchmark Hang Seng Index rose 1.2 percent.

Chinese Estates sold almost 109 million Evergrande shares for about HKD250 million (USD32 million) between Aug. 30 and Sept. 21, it said in a stock exchange filing today, adding that it may sell its remaining 751 million shares over the next 12 months, depending on market conditions.

If Chinese Estates sells all of the Evergrande stock it owns, it could report a HKD9.5 billion (USD1.2 billion) loss based on the developer’s Sept. 21 closing price of HKD2.27, the Hong Kong-based company said.

Evergrande [HKG:3333] surged today, finishing 17.6 percent up at HKD2.67, after a number of banks said the risks from the developer, which has liabilities of USD305 billion, are manageable.

Chinese Estates, controlled by Hong Kong businessman Joseph Lau's wife Chan Hoi-wan, was the sole cornerstone investor in Evergrande’s listing in 2009. Chan was Evergrande’s second-biggest shareholder with an 8.9 percent stake at the end of last year. An earlier exchange filing showed the couple sold 6.3 million Evergrande shares at an average price of HKD4.48 last month.

Chinese Estates relied on Evergrande for the bulk of its revenue last year, as the HKD2 billion income from the property developer’s dividend made up almost 65 percent of the firm’s total revenue in 2020, which soared 132 percent to HKD3 billion from a year earlier.

Editor: Futura Costaglione