Unless you have been offline all week, you probably have noticed the word Evergrande pop up in your favourite news media outlet. Let’s find out why the internet is buzzing about it!
In short, Evergrande is China’s second-biggest and most indebted real estate developer which is currently on the brink of explosion with a stunning $305 billion figure of unpaid debt. For comparison, Russia's state debt in 2020 was $257 billion.
The last time when the world experienced a meltdown of such a prominent market player was back in 2008 when the fourth-largest investment bank in the United States, Lehman Brothers Holdings Inc., suddenly went bankrupt. That was one of the main catalysts for the global financial crisis that followed right after.
What does Evergrande mean for traders?
According to Reuters, Evergrande has two repayments due in the coming weeks. First, an $83 million interest payment is due today and another repayment of $47,5 million is due September 29th.
As we already saw, the news on Monday, that the company may not be able to cover its obligations, shook the markets. For example, the S&P 500 fell by 1.7%, marking its worst day of trading since May. Bitcoin also spiralled down, from around $47,000 to around $40,000, with most of the altcoins following the decline.
So, beware of both potential outcomes and watch out for any breaking news. 📊
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