Evergrande’s demise is delayed but not denied

“Another kick of the proverbial can down the road as Evergrande’s liquidation hearing is adjourned. It just delays what’s almost inevitable for the property developer as policymakers and regulators do their best to engineer a controlled collapse of the company – by Kyle Rodda, Senior Market Analyst at Capital.com

The systemic risks posed by China to Evergrande have diminished, at least outwardly. So has the social backlash from some of the questionable behaviour of the firm, in particular, the dodgy wealth management products shilled to many mum-and-dad Chinese investors.

The central government appears to be orchestrating stronger and broader support packages for the industry— the likes of the embattled Country Garden were listed amongst finance companies eligible for unsecured loans, while the PBOC is lowering rates and boosting liquidity. That’s aiding market sentiment without reversing the bearishness toward Chinese assets.

The depth of the structural issues facing China’s property industry and therefore broader economy is unclear. Evergrande’s demise is delayed but not denied; it is happening with significant but not catastrophic consequences.”