Global | Evergrande matters, but it’s not a ‘Lehman moment’
While the potential collapse of Chinese property firm Evergrande matters, it doesn’t signal a ‘Lehman moment’ that might spark global financial turmoil. Its main effects are likely to be contained within China, with any global spillovers more likely to spread through the real economy than financial channels.
What you will learn:
- So far, the main financial effects have been in the Chinese stock and bond markets, with some early signs of stress in Chinese funding markets.
- Markets assume – probably correctly – that the Chinese authorities will contain the impact of Evergrande’s financial woes.
- Foreign creditors may take losses, but the scale of the potentially affected liabilities looks manageable, even if other Chinese property firms run into problems.
Tags:
Related Services
Post
High debt costs suggest European office price correction
Our analysis suggests a 10% correction is needed on average for the major office markets in Europe to compensate for the higher cost of debt, with prime yields required to soften by 10bps-75bps to generate a low-risk interest coverage ratio at a reasonable LTV.
Find Out More
Post
Why an ageing population doesn’t mean soaring inflation
What’s the future for inflation? Joachim Nagel, the new president of Germany's central bank, believes the rapidly ageing global population will play a key role – ramping up pressure on prices in the medium term. While we agree slowing labour supply will stifle output growth, in his recent discussion Nagel failed to fully consider the demand side of the argument.
Find Out More