After Chinese real estate giant Evergrande warned this week that it was struggling to raise the cash needed to pay interest, stocks fell to lowest levels on Monday, widespread global sales and the world’s most debt. There is growing concern about potential system risks that can occur in many cases. Real estate developers launch a huge $ 300 billion default.
Driven by losses from JP Morgan Chase, Goldman Sachs and equipment maker Caterpillar, the Dow Jones Industrial Average fell 615 points (1.8%) on Monday to 33,970, the lowest closing since July 19th. Recorded.
Meanwhile, S & P 500 and tech-intensive Nasdaq fell 1.7% and 2.2%, respectively, with energy and industrial stocks pushing up losses. The Dow is up 12.5%, while the index is now up 18% and 16% annually.
LPL Financial’s Ryan Detrick said in a note on Monday that he stopped trading onshore corporate bonds on Sunday after credit analysts warned of the investment, citing the rise of Evergrande.
With this development, Evergrande is “one step closer to restructuring or default,” Detrick added, with some analysts saying that default is “the first domino to fall.” [investment bank] Lehman Brothers fell 13 years ago, “said the beginning of the great recession.
Although many Asian markets were closed due to holidays, Hong Kong’s Hang Seng Index suffered significant losses, dropping 3.3% to its lowest point of the year.
Evergrande, China’s second-largest real estate developer, told banks last week that it couldn’t repay its debt this month. Evergrande, which owns about 1,300 real estate projects in China, says it has about 200,000 employees and creates about 2 million jobs each year through the project. Evergrande generated more than $ 100 billion in revenue last year, but since its inception 15 years ago, it has accumulated more than $ 300 billion in debt to help finance high-value development. US stocks were largely unaffected by last week’s turmoil, but sank shortly Monday after Bloomberg reported that it could miss the $ 84 million interest payments to be paid this Thursday.
Despite admitting that the Evergrande liquidity crisis can be “huge,” Detrick does not believe that Evergrande could cause a Lehman-style collapse. Unlike investment banks, he states that most of Evergrande’s debt is held in equity funds and equities, as opposed to banks and other important institutions. In addition, Detrick believes the CCP government is likely to intervene to avoid default if necessary, and the company also has assets that can be sold to settle its financial obligations. ..
David Byrne, Wealth Advisor to the Byrne Group in California, said, “The market has long been perfectly priced and seems to be quite seasonal throughout history. That is, we are dealing with uncertainty. ” “The market has experienced little downside volatility for a long time and the pullback has been postponed for a long time,” he said in an email on Monday that there is no systemic risk to the global economy due to the Evergrande situation. It was. “
Hong Kong Stock Exchange fell 3.3% as the Evergrande group plummeted and the infection spread (Forbes)
Evergrande Fate Week, Chinese Holidays Spotlight RMB (Bloomberg)