Evergrande could trigger a global market crisis

A looming debt-related default by Chinese Evergrande Group has suddenly shook up financial markets from Asia to Europe and the United States.
On Monday, major banks were told that they will not collect interest payments on loans that are outstanding, while interest payments of USD 84 million on the company’s bonds will be also due next Thursday.

The company’s shares fell by more than 10% in Hong Kong trade on Monday. The company’s ‘s deepening debt problems have triggered fears over the impact its potential collapse could have on China’s economy.
Growing investors’ anguish about Evergrande brought about waves through markets on Monday, adding additional pressure on China’s government to prevent financial infection from destabilizing the Chinese economy.
Hong Kong real estate giants have suffered the biggest selloff in more than one year. Traders speculated China will extend its property crack down to the financial hub.
Intensifying concerns about China Evergrande Group’s debt crisis dragged down everything from bank stocks to Ping An Insurance Group and high-yield dollar bonds.
One little-known Chinese property developer plunged 87% before shares were halted.
Hong Kong’s Hang Seng Index was low by 3.3%, its biggest loss since late July. The selling spilled over into the Hong Kong dollar, offshore Yuan and S&P 500 Index futures as holiday closures in much of Asia have exacerbated the volatility
Faced with uncertainty over how far China’s government is willing to go with market-roiling campaigns to achieve common prosperity and rein in over-indebted companies, several investors are choosing to sell first and ask questions later.
Interest payment deadlines this week on several Evergrande bonds and bank loans will add extra layer of risk as market participants brace for what could be one of China’s largest-ever debt restructurings.
The price action across several asset classes in Asia today is dire due to rising fears over Evergrande and a few other issues, but it could be an overreaction due to all of the market closures.

All three major benchmark stock indexes, Nasdaq, the S&P 500 SPX, Dow and industrialsDJIA experienced the worst one-day drop in more than two months.
Some commentators even recall Lehman Brothers, whose insolvency in September 2008 sparked the Great Financial Crisis.