Research Briefing | Oct 1, 2021

Global | Evergrande matters, but it’s not a ‘Lehman moment’

Ipad Frame-Evergrande-matters-but-its-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.

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