A shiver runs for bags around the world after the Request for protected bankruptcy procedure presented by Evergrande to the New York Court And the failure of Lehman Brothers returns to mind, which started the 2008 world crisis. The Chinese real estate giant risks triggering a contagion effect in the galaxy of trustees strictly connected with the brick of the dragon, already deeply in crisis.
The bankruptcy instance
With on the shoulders a debt from about 340 billion dollarsequivalent to 2% of Chinese GDP and higher than the internal product of countries such as Portugal, Greece or Finland, Evergrande has invoked the so -called “Chapter 15”, a procedure that in the United States is scheduled for foreign insolvent companies listed in Wall Street, with the aim of protecting them from creditors during the debt restructuring.
The Chinese real estate giant has tried to reassure on its position, specifying that “the company is carrying out its restructuring of the offshore debt as expected”.
“The application is a normal offshore debt restructuring procedure e does not involve the failure of bankruptcy“This is the clarification provided by Evergrande, who added how the appeal to the Court of New York through chapter 15 of the bankruptcy code of the United States is linked to the renovation agreements with Hong Kong and the British Virgin Islands (here we have reported the request for bankruptcy protected by Evergrande).
At the news of the bankruptcy request, the Asian bags reacted negatively, starting from that of Hong Kong, which collapsed by 2.07%, and that of Shenzhen, down 1.75%, with losses also recorded in Shanghai (1 %), Seul (0.61%) and Tokyo (0.43%).
The jump of the markets also reached Europe, albeit more slightly, where Frankfurt and London have lost 0.65%respectively and the O, 63%, followed by Piazza Affari (0.42%) and Paris (0.38 %).
The picture
The effects on the West were attenuated by the fact that the world of finance had been on alert for two years after the insolvency declared in China by Evergrande in 2021 (here we had talked about the suspension of the Evergrande titles on the Hong Kong stock exchange) but in case of failure of the real estate giant, the risk of a Lehman Brothers effect on the Chinese financial system could sink the economy of the dragon.
In the event of a crisis of the second economic giant in the world, the global repercussions would be inevitableand not only for countries dependent on China or linked to the infrastructure projects of the new silk road.
According to the Bank of England, the situation of the Chinese real estate market “could have an impact on the financial stability of the United Kingdom through trade or financial effects”.
Although foreign investments in China have fallen in the last 7 months of 4%, the fears member in the financial markets slowing down the securities of crude oil and oil, gas, gold, banks and luxury, including different Italians and European .