Evergrande downfall unlikely to result in global financial crisis, says analyst
Even as embattled property developer Evergrande faces an unprecedented liquidity crisis, China’s current real estate woes are unlikely to result in a widespread global financial crisis like the one seen in 2008, one analyst told Reuters on Friday
"The current issue is primarily related to the trust products in China and their associated investors. And these are mostly domestic institutional investors, not global investors. So it does not really have the potential to spread as widely and uncontrollably as a global financial crisis", said Kwan Ok Lee, Associate Professor and Dean’s Chair of Urban Planning at the National University of Singapore’s Business School.
Moving forward China will need to rely on other areas beyond the real estate industry such as those which are more knowledge-based and high-value as the country seeks long-term economic growth, added Lee.
Evergrande is the world's most indebted developer with more than US$300 billion in total liabilities. After defaulting on its dollar bond in late 2021, Evergrande has been in the process of seeking creditors' approval for its proposals to restructure offshore debt worth US$31.7 billion, which includes bonds, collateral, and repurchase obligations.
Reuters
