China and the US: Multidimensional risk balance

While the market focuses on the Fed's decisions with a high degree of impact; some stress factors also have to be monitored. Since we will also touch on the situation with the Fed; we'll consider other factors going on in the background here. The situation in question; It is important because it is ...

While the market focuses on the Fed's decisions with a high degree of impact; some stress factors also have to be monitored. Since we will also touch on the situation with the Fed; we'll consider other factors going on in the background here. The situation in question; It is important because it is also decisive in terms of market liquidity. We have the Evergrande crisis and the US debt ceiling events.

 

The economic impact of Evergrande due to its total debt exceeding 300 billion USD should not be ignored. The contagion effect arising from payment difficulties, default and bankruptcy risks is likely to affect markets outside of China as well. The deep drop in stocks is not only affecting mainland China, but also Hong Kong is also under stress. There may be cases where debts to creditors and the market affect many relative companies. Of course, the impact of the collateral problem on banking is also at the center of the business. There are two bond payments on Thursday and the company will likely default on those payments. The decline of the company's bonds well below the issuance price is related to the risk of bankruptcy and the low real estate sales that affect the cash situation also affect the situation of the sector in general. The PBOC provided $14 billion in short-term liquidity to relieve stress on the financial system. Possible bailout or liquidity intervention by the central bank or government will be expected if there is no spontaneous recovery or restructuring.

 

Since the debt ceiling issue in the US also concerns Treasury borrowing and the repayment of bonds, this problem will have to be resolved first in the event of a possible failure to deal and shutdown. The event is about the default state of the US Treasury…

Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı

20 Eyl 2021 - 10:18 - Dünya


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