A thread on Evergrande
Who is Evergrande?
Evergrande is the largest property developer in China.
It has nearly 1,300 projects in 280 cities with 2% of the Chinese real estate market.
As per media reports over 1.5 million people are waiting for their homes to be completed by Evergrande
So what is the problem?
Evergrande,has liabilities exceeding $300 billion(22.5 lakh crore),is on a brink of default
Investors faced a shock when the company hinted that it may default on $80 million interest payment due on September 23
As a result of this Junk Bond yields are at the higher since March 2020
Will Evergrande default?
As a systemically important developer,Evergrande bankruptcy would cause problems for the entire property sector
Debt recovery efforts by creditors would lead to fire sales of assets+hit housing prices.
Financial markets would be devastated
Will the Chinese Govt rescue Evergrande?
Evergrande is far bigger than Lehman
It is impossible to know for sure what would happen if China allows Evergrande’s downward spiral to continue unabated
Pressure to intervene is growing as signs of financial contagion increase
Conclusion-
🏘️Evergrande is a very big player in the Chinese housing market
🏘️Bankruptcy for Evergrande will be bigger than the Lehman crisis
🏘️Bankruptcy will have devastating consequences for the global financial markets
🏘️Intervention from the Chinese govt is a necessity
*My View - Every news though treated as threat will become an oppurtunity for India 🇮🇳🇮🇳🇮🇳*