China continues to arouse interest among investors globally. The Asian powerhouse is in great turmoil amid fears of Evergrande’s default and Xi’s regulatory crackdown.
Not just the energy crisis: China focuses on at least two other reasons that shake and affect global markets.
The first is the liquidity crisis of the colossus Evergrande, which continues to lack payments from offshore bondholders. The default could be irreparable: on what impact on the real estate sector and global finance?
And then, there is Xi Jinping’s political strategy, aimed at increasingly controlling the internal market with strict rules on large companies in all sectors. According to the Wall Street Journal, Beijing intends to inspect financial institutions and stop extreme capitalism.
Therefore, the economy and global markets look to China with interest and not a little nervousness: we see the latest news from Beijing, a strategic player in this delicate moment for world recovery.
The Evergrande case is not closed: the news from China.
The news coming from the Evergrande front is not good, and the risk of failure for the giant appears more and more realistic.
On Tuesday, October 12, the Chinese giant missed its third round of bond payments in three weeks, intensifying market fears of contagion involving other real estate developers.
Evergrande bondholders said they had not received the payouts due for three offshore bonds at maturity on Tuesday. According to testimony, the world’s most indebted developer was expected to make interest payments totalling $ 148 million on dollar-denominated bonds by noon October 12 in Hong Kong, but this was not the case.
Evergrande had already missed an $ 83.5 million interest payment late last month on a bond maturing next year. In total, at least five disbursements have not been made.
The developer’s ongoing liquidity crisis has caused a stir in China’s sizeable real estate sector. With home sales slowing, Beijing is lobbying developers to reduce debt, with many of Evergrande’s colleagues nearing default.
Sinic Holdings and Fantasia, other Dragon real estate groups, have declared defaults on due payments.
The Asian high-yield bond market, where Chinese developers are among the largest issuers after decades of rapid urbanization in the country, has been turbulent in recent days, with yields soaring.
A squeeze of Xi against capitalism
In line with the strategy of greater control over large domestic companies, Chinese President Xi Jinping would have targeted state-owned banks and other financial institutions.
The reason is the desire to control the link with the major players in the private sector to curb the extreme forces of capitalism. These are the rumours leaking from the Wall Street Journal.
According to rumours, the plan includes a flurry of inspections on the work of state banks, investment funds and financial regulators considered too friendly to private companies, especially with giants such as China Evergrande Group, travel company Didi Global the group of financial technology Ant Group.
In addition, according to the international media, the State Administration for Market Regulation is expanding its staff to control antitrust investigations, mergers, and monopolistic operations of national giants more effectively.
The Chinese, therefore, is in the midst of significant changes and potentially impacting global finance events.