Sumary of Markets not spooked by Evergrande troubles:
- NEW YORK • Debt-crippled Chinese real estate giant Evergrande’s troubles are being watched closely by foreign investors, but markets do not seem to fear a major contagion, at least so far.
- However, IG France analyst Alexandre Baradez said “the market is not surprised as it may have been by Lehman Brothers”, the American banking giant whose spectacular collapse in 2008 was the spark that ignited the global financial crisis.
- “Lehman was a shock: a well-rated bank that disappeared overnight,” Mr Baradez told Agence France-Presse.
- With a presence in more than 280 cities, Evergrande is one of the largest private companies in China and one of its leading real estate developers.
- The Chinese government seems determined to get control of the Evergrande situation, even if it means forcing the company to go out of business.
- Analysts instead expect to see a government-led restructuring that will pay off debts while maintaining certain business activities in order to limit losses.
- The exposure of foreign clients also remains relatively minor: only about US$7 billion of Evergrande’s debt is held by non-Chinese investors.
- Mr Baradez said that “is not an amount that is impossible to absorb or likely to frighten” financial markets.