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What is Evergrande: the Chinese real estate giant that threatens the world with a great crisis

2021-09-20T18:09:13.212Z

Their shares have fallen 90% so far this year and they carry a debt of US $ 300,000 million, which they fear they will not be able to pay. Blue dollar today: how much it is trading this Monday, September 20



09/20/2021 2:54 PM

  • Clarín.com

  • Economy

Updated 9/20/2021 3:05 PM

Evergrande is on the brink of collapse, threatening to cause an effect like Lehman Brothers in 2008 on Wall Street

.

It is the second largest real estate developer in China and accounts for 2% of that country's GDP.

His serious liquidity crisis could prevent him from assuming the millionaire debts he has with his creditors

for a loan that expires on September 20

.

The bond interest payment for US $ 83.5 million (about 71.2 million euros) is due next week.

Over the past few weeks,

Evergrande has warned investors about its liquidity problems

, saying it won't be able to take on debt if it doesn't raise money quickly.

That warning was more evident last Tuesday, when he 

confessed that he was having trouble finding buyers for some of his assets

.

On Saturday, the company issued a statement on the Chinese social network WeChat to announce that

investors who want to have their

wealth management

products reimbursed

with tangible assets

can contact their investment advisers and

choose between apartments, offices, commercial spaces or parking lots. at a reduced price as a method of reimbursement.

One of the biggest fears raised by the possible bankruptcy of Evergrande is that there will be a

'domino effect

' that affects the entire country, as it would force creditors to bear the costs and ruin hundreds of companies.

Therefore,

analysts trust the Chinese government to intervene to minimize the impact

.

For his part, Mark Williams, chief economist at Capital Economics for Asia, predicted in dialogue with CNN that China's central bank would

"intervene with liquidity support"

if fears of a major default intensify.

Possible Chinese Lehman Brother? Photo: Kyle Lam / bloomberg

The company's business

The Chinese conglomerate is part of the Global 500,

which means it is also one of the largest companies in the world by revenue

.

Founded in 1996 by Xu Jiayin, this company generates about 3.8 million indirect jobs and currently has 200,000 workers.

The company, which is the wakefulness today of large investors who bought high-yield debt, could default in the short term and

cause a global financial crisis

.

However, this Monday its shares fell to 19%, their worst level in 11 years, registering a cumulative fall of 90% so far this year.

Currently,

Evergrande has a debt of about US $ 300,000 million, equivalent to 2% of Chinese GDP

.

The real estate sector in the Asian giant represents about 30% of its economy.

Regarding its achievements, the company highlights on its website that it has almost 1,300 projects in 280 cities

and has sold houses to 12 million owners.

Evergrande is listed in Hong Kong and is headquartered in the city of Shenzhen

in southern China.

The group was founded by Chinese billionaire Xu Jiayin, who was once the richest man in the country

.

Outside of the real estate market,

the group invested in electric vehicles, sports and theme parks

.

He even

owns a food and beverage business, selling bottled water, groceries, dairy products,

and other goods throughout China.

In 2010, the company bought a soccer team, which is now known as Guangzhou Evergrande.

And that team built what is believed to be the largest soccer school in the world.

Evergrande also caters to tourists through its theme park division, Evergrande Fairyland.

The project includes an artificial island with shopping centers, museums and amusement parks.

Lehman Brothers: What Happened in 2008

On September 15, 2008, the

Lehman Brothers Bank declared bankruptcy

with a liability of US $ 430,000 million, which produced a domino effect,

resulting in the largest global economic crisis in history, which they called the Great Recession.


American investment banking was founded in 1850 with businesses in all sectors. 

The company, with strong leverage in the subprime mortgage market,

grew to become the fourth largest investment bank in the United States in 2008,

behind only financial giants Goldman Sachs, Morgan Stanley and Merrill Lynch.

YN

Look also

Evergrande effect: Argentine stocks on Wall Street sink more than 10% and the Merval loses 5.1%

The collapse of the Chinese giant Evergrande already impacts the rest of the world's markets

Source: clarin

All business articles on 2021-09-20

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