Evergrande problems could spread outside China – Charles Schwab

On Monday, S&P 500 closed down 1.7%, its largest drop since May. The consequences of a restructuring or default of China Evergrande Group this week are likely to largely be confined within China, but global investors could see some effects, strategists at Charles Schwab report.

See – China: Systemic risks to be avoided following the fall of Evergrande – Natixis

Could Evergrande’s troubles reverberate to the rest of the world?

“While the primary impact of Evergrande’s problems is likely to be felt within China, its fortunes are of interest to global investors due to the impact on emerging market bond funds, commodities and equipment related stocks.”

“China’s economic growth could take a hit and hurt demand for companies globally, but downside risks to growth could prompt Chinese policymakers to add stimulus and result in a rebound for Chinese stocks, with the MSCI China Index off nearly 30% from the 2021 high.”