China's evergrande crisis

China’s Evergrande Collapse Are we about to experience another Lehman moment? It is decidedly So! Evergrande is a real estate firm primarily founded in 1996 and presently have a lot of debt. Their primary business is real estate despite this they run several other small businesses. They are quite of a big deal in China and they are by the way most indebted company. The main reason for default is the interest payment. It’s pretty clear that Ebergrande issued more dollar-denominated debt. They are definitely in a cash crunch position. Part of the problem is that whole price growth weakens. This is a huge part of the Chinese economy which raising social unrest among investors. In 2012 by American short-seller, Andrew left cited that the government was also aware of the company’s financial health hence the crisis has been long-awaited. It’s not just the real estate sector they have done some off-balance-sheet work in wealth products. About 6. 2 billion dollars worth of products are due and do off-balance sheet. So nobody really knows how much Evergrande owes! Any guarantee is based upon the other side’s claim paying ability which Evergrande fails to comply. That could lead to a spider web effect leading to DOMINO EFFECT. That’s why it is known as Lehman Moment.