China in the spotlight: what markets should look at

Friday 24 September 2021

Research / Market

Evergrande: not a systemic risk, but a wake-up call in an over-indebted world. Over the past days, financial markets have been shaken by the Evergrande saga – China’s second-largest property developer – which is facing difficulties in servicing its huge debt pile. The scale of such a potentially large restructuring event is weighing on Asian credit markets, with bonds of other companies in the property sector (an important part of the high yield (HY) segment) trading down. Putting this event into the broader context, the contagion effect on global markets has been limited so far, with some volatility in equities (the VIX index hit an intraday high of 28.8 on 20 September 2021) and a modest retracement from historical highs (the S&P 500 is down 2%)...

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