THE Covid-19 pandemic will feel like a mild shiver down the spine of the world’s financial markets if China’s second-largest real estate developer Ever grande defaults. This will be comparable to the subprime disaster of 2007-08.
Evergrande, with a debt burden of around $300 billion, is the world’s most indebted real estate developer, and IL&FS, India’s real estate financier NBFC that collapsed, is not even a baby compared to that—IL&FS had combined debt of around Rs 1 trillion.
The problem is bigger than the debt, though. It is being said that China’s authoritative Communist regime may not be in any mood to rescue the company, just wanting to let it die. This is going by President Xi Jinping’s mood as seen in dealings with Chinese tech giants, such as Alibaba and edutech companies in the recent past.
That won’t be a peaceful death. While the Chinese real estate sector will take a massive hit, the bigger scare is that banks the world over will be the most affected. This could be a contagion of Biblical proportions and fingers remain crossed across all boards.
This story is from the October 4, 2021 edition of India Legal.
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This story is from the October 4, 2021 edition of India Legal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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