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Market volatility due to threat of default Evergrande
The dollar is growing and strengthening, the stock market fell due to fears of the bankruptcy of China's largest developer
Sep 21, 2021
1 min read
Anna BakkerNews analyzer

The likely bankruptcy of the Chinese construction company Evergrande Group puts pressure on risky assets.

The stock market began to sell off due to investors' fears about the bankruptcy of the Chinese developer Evergrande. Negativity was also added by expectations of a reduction in the Fed's stimulus programs at the next meeting, RBC writes.

Evergrande lacks the liquidity to pay off its obligations and could face bankruptcy, risking the largest economic disaster in modern Chinese history.

In trading on Monday, Evergrande shares have lost another 11%, dropping 17 times since the beginning of this year. The Chinese authorities have already warned banks that the developer will not be able to pay on its obligations.

The volume of corporate debt is the largest among the state-owned construction companies in the world. Evergrande's total debt is about $ 305 billion, which is 2% of China's GDP.

The bankruptcy threat of Evergrande is currently the biggest negative for the markets, as the default of the largest developer in China could trigger a chain reaction in the event of a default, not only in China, but in the entire global market.

Market volatility may increase even before the Fed meeting, and the results will be announced on Wednesday evening. Uncertainty will affect quotes, although earlier comments from the Fed had a more positive effect than the strengthening of market sales in the midst of the economic downturn.

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