Growing fears of China Evergrande defaulting rattled global markets on Monday as investors worried about the potential impact on the wider economy dumped Chinese property stocks and sought refuge in safe-haven assets.
Shares in Evergrande (3333.HK), which has been scrambling to raise funds to pay its many lenders, suppliers and investors, closed down 10.2% at HK$2.28 on Monday, after earlier plummeting 19% to its weakest level since May 2010.
Regulators have warned that its $305 billion of liabilities could spark broader risks to China’s financial system if its debts are not stabilised.
World shares skidded and the dollar firmed as investors fretted about the spillover risk to the global economy. U.S. stocks were sharply lower, with the S&P 500 (.SPX) down nearly 2%.
A major test comes this week, with Evergrande due to pay $83.5 million in interest relating to its March 2022 bond on Thursday. It has another $47.5 million payment due on Sept. 29 for March 2024 notes .
Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.
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