Hedge Connection Blog: China Faces A Real Estate Reckoning With Evergrande Default Imminent September 24, 2021
September 2021 - Real Estate
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Summary: The ongoing collapse of China’s Evergrande Property Group is the top financial headline around the world, as the firm faces an almost certain default. Though some are quick to point out that Evergrande is a relatively small piece of a heavily fragmented Chinese real estate market, it’s still one of the top 3 domestic developers and emblematic of the wild speculation that’s characterized the country’s ever-inflating property bubble.
Contagion is a very real threat for China’s economy, with real estate activity making up 20-30% of the country’s GDP. Negative sentiment surrounding Evergrande’s lack of liquidity has already crashed at least one other heavily-indebted property developer. If Beijing does not step in to provide a bailout or restructuring plan, the red-hot industry could come to a screeching halt.
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