Does Evergrande Put Chinese Banks in Peril?

The liquidity crisis in the Chinese property space looms large. Which banks will be most impacted?

Kate Lin, CAIA 17.09.2021
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Chinese investors have been watching the China Evergrande Group (03333) situation with increasing worry for a while now. In the latest twist, the real estate developer is on the edge of defaulting on its massive bond complex. The indebted developer’s website says it owns more than 1,300 projects in more than 280 cities. It also has around US$300 bn in liabilities.

“While official estimates of NPLs and special-mention loans are at 5.5% of GDP (in China), private sector estimates are significantly higher... Risks within the real estate sector are also rising: the liquidity crunch facing China’s largest property developer Evergrande Group is emblematic of the problems within the sector. Real estate and construction account for a quarter of fixed asset investment, 20% of banks loans and 15% of GDP,” said a DBRS Morningstar report.

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About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

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