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Beijing is preparing to take measures to prevent the crisis of the country’s second real estate developer, China Evergrande Group, from turning into a Chinese “Lehman moment”, which means the collapse of the American bank Lehman Brothers which triggered the global financial crisis, but some Chinese banks could be victims of the default of Evergrande, which begins to weigh on the world markets, according to analysts at Citigroup.
“Policymakers are likely to support minimal prevention of systemic risks to buy time until leverage risks are resolved and advance marginal easing of the overall credit environment,” analysts wrote, including Judy Chang, in a note.
Growing investor concerns over Evergrande and the crackdown on China’s real estate sector sparked a chain reaction among risky global assets this week, trapping even stocks with less ties to China.
Last week, Evergrande released a pessimistic report on its financial health, saying it faced enormous cash pressure and had hired advisers to look into what could be one of the biggest debt restructurings in the world. country.
Evergrande has over $ 300 billion in liabilities, half of which includes payments to contractors.
Citigroup’s analysis of banks’ exposure to high-risk developer loans indicates that credit risk is highest for China Minsheng Banking Corp., Ping An Bank Co., and China Everbright Bank Co.
Analysts wrote that Bank of Nanjing Co, Chongqing Rural Commercial Bank Co and China Postal Savings Bank are less exposed and “we will see any downturn as a stimulating opportunity to buy quality stocks.”
“There are few opportunities for Evergrande’s systemic risk,” said Shujin Chen, analyst at Jefferies Financial Group, Inc., and advises investors to buy bank stocks when it goes down. Among Chen’s top picks in this area is the China Construction Bank. Corp and Ningbo Co, from what I mentioned in a note.
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