Evergrande contagion risks intensify, but PBoC says can be contained in China
Bloomberg has reported that the People’s Bank of China Governor Yi Gang said authorities can contain risks posed to the Chinese economy and financial system from the struggles of the China Evergrande Group.
at a virtual meeting of the Group of 30 on Sunday. Yi Gang said that the property developer’s trouble “casts a little bit of concern,” but, “overall, we can contain the Evergrande risk.”
These comments follow the past couple of weeks of heightened concerns over contagion risks due to a surprise default by Fantasia Holdings Group Co. and a warning from Sinic Holdings Group Co. that its default was imminent.
However, Yi said Evergrande’s liabilities were spread across “hundreds” of entities in the financial system so that there is “not much concentration.”
“The rights and interests of creditors and shareholders will be fully respected in strict accordance with the law. And also the law has clearly indicated the seniority of those liabilities,” he added.
“I think we can prevent systemic risk,” he said, by keeping risk contained.
Market implications
There is a very watchful eye over the situation and the Aussie is likely the most exposed of the majors to the crisis for its reliance on iron ore and various exports with their largest trade partner.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
