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Chinese central bank signals aid for Evergrande

2021-10-02T00:15:15.217Z


Apparently, China's central bank wants to jump to the side of affected consumers in the Evergrande crisis. The real estate company's shares rise promptly.


Enlarge image

Construction of an Evergrande building complex in Zhumadian

Photo:

JADE GAO / AFP

For the first time, the Chinese central bank has commented on the shaky real estate company Evergrande - and indicated help.

Investors were therefore promptly relieved: Evergrande shares rose by a good eight percent in Hong Kong.

Stocks from other real estate groups also rose.

Specifically, the People's Bank of China (PBOC) did not comment on Evergrande's debt problems, but promised to protect the rights and interests of private individuals invested in the real estate market.

Observers see this as an indication that affected consumers should be protected.

The PBOC also stated that it would make its monetary policy "flexible, targeted and appropriate" and ensure more stable credit growth and adequate liquidity in the market.

Investors had been waiting for a comment from the central bank for days.

Financial regulators want to examine the Evergrande case

Meanwhile, the provincial government of the city of Shenzhen wants to scrutinize the wealth management division Evergrande Wealth.

In a letter to investors available to Reuters news agency, the Shenzhen financial regulator said it would conduct a thorough investigation into the company's debt problems.

She also asked Evergrande to seek repayments to investors.

Evergrande, like other highly indebted conglomerates, has sold high-yield investment products to investors, thereby raising money for borrowing by circumventing government regulations.

In total, the group has piled up debts of more than 300 billion dollars in recent years and has defaulted on creditors.

Angry investors stormed the company's headquarters a few weeks ago and asked for their money back.

Last week, Evergrande let a deadline for bond interest expire without comment.

Another $ 47.5 million is due on Wednesday.

Asian Development Bank (ADB) president Masatsugu Asakawa said China had sufficient monetary policy options to prop up the financial system and avoid domino effects.

"I don't think the troubles of a single company will create a global crisis like the one caused by the collapse of Lehman Brothers," Asakawa said.

Financial consequences for Evergrande customers and the budgetary situation of Chinese local provinces cannot be ruled out.

hej / Reuters

Source: spiegel

All business articles on 2021-10-02

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