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China’s Economic “Contagion” or “Collapse”

Posted September 13, 2021

Aaron Gentzler

By Aaron Gentzler

China’s Economic “Contagion” or “Collapse”

About ten days ago, we reported on China’s looming debt crisis via the country’s second-largest property developer Evergrande Group.

And this morning we learn: “Chaotic scenes erupted at the headquarters of cash-strapped developer China Evergrande Group on Monday,” says Reuters.

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“Roughly 100 disgruntled investors crowded its lobby to demand repayment of loans and financial products.”

Clearly, the Evergrande Group is unraveling. (Note: there’s nothing Beijing likes less than social upheaval.)

Will the Chinese government provide a bailout for the ailing firm? Evergrande was seeking “the coordination and support of the government.” We have more on the situation…

Send your opinions to, TheRundownFeedback@StPaulResearch.com

Your Rundown for Monday, September 13, 2021...

Evergrande Edges Closer to Default

If you remember our last Evergrande report, the company is flat-broke -- in debt to the tune of $300 billion.

Earlier this month, “the highly indebted company [warned] it may default on its borrowings if it can’t resolve its liquidity problems,” says an article at The Wall Street Journal.

And today, The Guardian says: “With the likelihood increasing every day that the massively indebted group will be dismantled to avoid triggering a market-wide panic, trade in one of its bonds was suspended in Shanghai on Monday after it plunged 25%.

“A disorderly failure of Evergrande would represent a serious risk to the whole Chinese economy, with the risk of contagion in the rest of the world.”

But Nomura International Hong Kong credit analyst Iris Chen tells Bloomberg the Chinese government will step in, ensuring that “Evergrande delivers homes and pays suppliers, where dollar debt investors would get 25% of their money back,” says The Guardian.

“Given the large size of its balance sheet,” says Ben Wang of Jamieson Coote Bonds,  “Evergrande is deemed as a systematic risk to the Chinese financial system.

“The authorities cannot afford to let it fail abruptly. We believe Evergrande is likely to collapse in a controlled manner.”

Controlled or not, Evergrande’s collapse will have a meaningful impact on China’s economy and, in turn, the global economy. We’ll keep you posted…

Market Rundown for Monday, Sept. 13, 2021

The S&P 500 is up 0.27% to 4,470.

Oil too is in the green: up 1.6% to $70.84 for a barrel of WTI.

Gold’s churning in neutral at $1,72.50 per ounce.

Bitcoin is down 1.6% to $4,170.

Send your comments and questions to, TheRundownFeedback@StPaulResearch.com

Have a great Monday! We’ll have more to say Wednesday.

For The Rundown,

Aaron Gentzler

Aaron Gentzler
Editor, The Rundown
TheRundownFeedback@StPaulResearch.com

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