Beijing unlikely to save Evergrande, report says

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The US stock market fell 614 points, or 1.78%, on Monday

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Evergrande, the massive Chinese real estate developer that is struggling to avoid defaulting on $89 billion in debt in the US market on Monday, is unlikely to benefit from a Beijing bailout, according to a report.

Credit rating agency S&P Global Ratings said in a report on Monday that Beijing “will be forced to act only if a far-reaching contagion causes several major developers to fail and poses systemic risks to the economy,” according to Bloomberg. “Evergrande failing alone would be unlikely to result in such a scenario.”

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The US stock market fell 614 points, or 1.78%, on Monday with the S&P 500 Index and Nasdaq Composite falling 1.7% and 2.19%, respectively. The Dow was down nearly 972 points at its worst level of the day.

“I suspect the Chinese government is on top of this, and I don’t doubt they will deal with it seriously, but I don’t think it will have the global impact that the market is suggesting this morning,” said Carlyle Group Co-Founder David Rubenstein During an appearance on “Morning with Maria” on Monday.

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White House Press Secretary Jen Psaki said the company’s work is “highly concentrated in China.” But she said the Biden administration is monitoring global markets, including any risks to the US economy. She assured Americans that the administration is “ready to respond appropriately if necessary.”

a Reuters report said that many US investors do not believe that the company will drag down the global economy similar to the collapse of Lehman Brothers in 2008. The Financial Times called Evergrande the world’s most indebted property company.

Logan Wright, Hong Kong-based director at Rhodium, said, “Investors … are rightly asking where Beijing’s pain threshold falls in terms of slowing economic growth, allowing authorities to reverse course and ease controls toward the property industry. Will go.” Group, Told the paper “That turning point in policy is still far away,” he said. “Beijing is more likely to wait for signs of financial stress, rather than act pre-emptively.”

Evergrande did not immediately respond to Granthshala News’ inquiries.

Evergrande ran into a cash crunch after borrowing to build apartments, office towers and shopping malls, under pressure from the ruling Communist Party to reduce the corporate debt load seen as a threat to the economy. bumped up.

Andrew Left, the founder of Citron Research, who called Evergrande bankruptcy in 2012, told Reuters he did not think “this will be the straw that will break the back of the global economy.”

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