China faces financial crash with collapsing real estate market | City & Business | Finance
Global stock markets are getting nervous and fear a chain reaction across the globe. Hong Kong financial analysts said, “It could become the Lehman crisis in China.” Real estate giant Evergrande is struggling financially and is warning the global public of “unprecedented problems”.
A chain reaction could start after real estate company Evergrande has debts of US $ 300 billion.
Today, Professor Hao Hong of Tsinghua Wudaokou School tweeted, “Mainland developer listed in HK plunges 90%, much worse than Evergrande.”
There is now a threat of massive defaults in China’s banking system that could send waves of further defaults across the globe.
Analysts are now worried that the Chinese real estate bubble is about to burst after years of steady growth.
Experts from global rating agencies said, âThe perfect storm has formed for China’s real estate and credit industry.
He warned that the circumstances “could trigger a crash.”
Volker Treier, head of foreign trade at the German Chamber of Commerce and Industry (DIHK), said: âThe risk of overheating the Chinese real estate market cannot be ruled out.
“German companies fear a bubble will burst there.”
German exporters now fear that a bursting of the real estate bubble in China will lead to a drop in the consumption of German products in China.
Retail sales from China fell just 2.5% from the previous year.
Beijing is also pushing to regulate the country’s digital technology sector.
This has led investors to withdraw money from China for fear of government crackdowns on the industry.
Shares of Alibaba, the Chinese equivalent of Amazon, have halved in a year.
Digital giant Tencent saw its shares drop from Â£ 68 in February to less than Â£ 42 today.
The Hangseng Index has now slipped from its annual high of 31,183 points below the 25,000 mark.
Large American investor Cathy Wood has already sold Chinese stocks on a large scale.