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Evergrande, which is struggling to manage its mountain of $ 300 billion in debt, was supposed to pay interest on some of its bank loans on Monday, according to Bloomberg. The company will also have to pay interest on two of its bonds worth more than $ 100 million later this week on two of its bonds, according to Refinitiv.
Evergrande shares fell more than 10% in Hong Kong.
Why are global investors so worried about what is happening in the Far East?
Everything is interconnected in the world of financial markets, and the huge amount of money borrowed by Chinese companies has long been seen as an imminent threat to market stability. Today, investors fear the banks’ exposure to Evergrande and similar companies.
But it’s not just contagion concerns that are pushing the market down. US stocks struggled to move last week, and market analysts have long said a correction was needed after the long rally that pushed stocks to record highs.
“On a market down day it’s easy to look at the closest stock like Evergrande and tie a cause and an effect, but this market has seen almost no downside volatility for a long time and a pullback was expected. for a long time, “said David Bahnsen, chief investment officer at The Bahnsen Group, in a note to clients.
Still, the ripples were felt all over the market. Bond yields fell as prices rose because investors took cover. Bitcoin, another risky asset class, also felt some pain and fell about 8%.
Laura from CNN Business contributed to this story.
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