The flapping of a butterfly’s wings in China is already being felt in stock markets around the world and also in Spain. The investors Now they fear that a bankruptcy like that of Lehman Brothers in 2008 will be repeated with the aggravation of the economic hangover dragged by companies after months of pandemic. Tensions between the Asian giant and the United States also loom on the horizon. The Ibex 35 fell more than 2% today Monday in the middle of the session, dragged by the collapse of the Hang Seng index in Hong Kong, which closed the day with losses of 3.3% due to the possible bankruptcy of the Evergrande real estate company.
At 1 pm, the selective Spanish Ibex 35 fell more than 2% and stands at 8,603.40 points. In line with the Ibex 35, the remaining European markets are trading down, so that Frankfurt loses 2.33%; Paris, 2.28%; Milan, 2.25%; and London, 1.67%. Within the Ibex, the biggest losses were suffered by ArcelorMittal, which fell 7.9% after 1 pm. Spanish banks also fell sharply due to the risk of contagion among Evergrande bondholders. Thus, BBVA fell -7.12%, Banco Sabadell fell 5.29%; Bankinter, 4.84%, Santander, -4.51% and Caixabank, 4.48%.
“Investors are concerned about whether or not the Evergrande group will be able to meet its interest payment on obligations amounting to 83.5 million dollars next Thursday,” interpret the experts from Monex Europe. “In addition, other concerns are raised regarding this week’s opening ahead of the upcoming elections in Canada and Germany, while the tensions between China and the United States and the United Kingdom continued to take its toll on risk appetite,” add the same analysts.
The Chinese real estate Evergrande announced a few weeks ago that it would pay its debts in properties and not with money and since then it has plummeted on the Hong Kong Stock Exchange. In August, the company admitted that it was at risk of default due to difficulties in obtaining the necessary liquidity due to the suspension of work on several of the projects already underway. Now, economists and financial advisers fear that Evergrande will not have the capacity to pay the interest payments on its loans and bonds.
Faced with a scenario of possible bankruptcy, the Asian markets registered sharp falls this Monday led by the Hong Kong Stock Exchange, which fell 3.3% at the end of the trading day. For its part, Evergrande, which fell by almost 19% at the time of the session, closed with a 10% drop. Other real estate companies were also infected by the fear of the fall of Evergrande: New World Development dropped 12.3% and Henderson Land lost 13.2%. Likewise, the Hang Seng Property Index lost more than 6% and posted its worst result since May 2020.
Analysts expect the Chinese authorities to intervene to prevent Evergrande from falling. “The central government’s priority of social stability makes restructuring likely with cuts for debtors,” Tapas Strickland of the National Australia Bank told Europa Press.