The Evergrande Saga — a real estate meltdown in China that is sure to make waves across Southeast Asia.
A brief introduction about the Evergrande developer meltdown currently happening in China and may be set to impact markets across Southeast Asia.The liquidity woes of Evergrande may spread to Southeast Asia property markets and construction supplies even if financial risks are contained. There is growing concern if Evergrande and other property developers come under pressure and default on Southeast Asian overseas projects and suppliers.
It seems like history is repeating itself. Analysts fear it could turn into a Lehman Brothers situation, where the world’s second-biggest economy could suffer from a mountain of debt that Evergrande is in.In August 2021, a series of financial metrics deployed by the Chinese government to improve the financial health of property developers and cool lending to developers failing three so-called “red lines”, was an impediment to Evergrande. Undoubtedly, the firm did not pass all three red lines.
Thirdly, many Chinese banks have been cutting their risk to property loans since 2020 according to a JP Morgan report. Rendering of Lotus Stadium in China touted to be the world’s largest stadium to house 100,000 spectators. Image: Hospitality-on.com The producers of construction and building materials and even manufacturers of electrical machinery in Southeast Asia are not spared from the melee because there would be a negative impact on the Chinese housing sector. This puts their credit positions in jeopardy.
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