Debt-ridden property developer Evergrande has created a fear factor amongst investors that the problem might spill over to broader markets. Investors believe that this could mean a collapse of the Chinese financial system as it owes over $300 billion. The ongoing engagements in US and the historic quad meet has led to the world ignoring what could easily be the biggest financial crisis in 2021- The Evergrande crisis.
The Chinese real estate major stands at the brink of collapse sinking in 300 billion dollar debt. It’s stocks have fallen by over 80% and this is expected to have a huge impact on China’s economic output. Amid the Chinese economic downturn, experts are suggesting that the crisis could benefit the Indian market further.
“The linkage of Evergrande’s debt to other global financial actors is modest, despite the size of it. As a result the risk of contagion is small. China has more than enough financial resources to dampen a possible bankruptcy or restructuring,” Stan Shipley, fixed income strategist at Evercore ISI in New York, said.
Decoding the Evergrande crisis in numbers, out of the $300 billion total debt, the interest left this month is $165 million. There are over $4 million jobs at stake and the money is owned to 170 banks. This has led to 2% impact of China’s annual output. Meanwhile, there is 85% drop in stock value.