InstaForex

September 21, 2021

Evergrande Debt Crisis Also Haunts The Local Stock Market

 Concerns over the issue of Chinese real estate giant Evergrande continue to haunt investors and raise questions about whether it can afford to pay or not.


The impact of Evergrande has indirectly affected almost the entire global market, including the Asian equity market, but the impact on the Malaysian stock market is expected to be somewhat limited.


AmInvestment Bank said the risks to Asian equity markets were seen to be limited unless the Chinese government allowed Evergrande not to take any follow -up action to control the situation.


"But it is a situation that will not happen at all because of course Beijing will try to solve the problem in order to provide stability to the people," he added.


Evergrande, which is listed on the exchange, now faces liabilities in excess of 485 billion yuan ($ 300 billion) as a result of the financing loan.



According to the investment bank, the two real estate companies associated with the republic's property market are IOI Properties Group Bhd and Sunway Bhd.


Which IOI Properties has a development in Xiamen while Sunway Bhd has a development in Tianjin.


After conducting the valuation, AmInvestment Bank set the FBM KLCI target for the end of 2021 to be 1,643 points compared to the previous level of 1,695 points.


Through these concerns, it also continued to drag Evergrande's share price to decline 10% yesterday to HK $ 2.28 thus reaching the lowest level in more than 11 years.


Meanwhile, from the year to date (YTD), the stock has experienced a decline of 85% from the HK $ 14.90 level reached in early 2021.