China’s Evergrande and Inflation Worries take Toll on Asian Shares

Asian shares fell on Monday as Evergrande worries continue with growing inflation reports. The debt-laden property developer suspended trading of shares after the announcement of a pending transaction.

Evergrande was unable to make an important interest payment for the second time on its offshore debt liabilities. According to the Chinese media outlet, the company plans to sell its stake in property management for over $5 billion.

Kazutaka Kubi, senior economist said, “The biggest problem is not a default by Evergrande but the environment that has led to its downfall. Authorities are regulating housing loans and lending to property firms. Markets are looking for a next Evergrande already. There is a rising risk Evergrande’s woes will spread to the entire Chinese property sector.”

It was reported that Hong Kong’s Hang Seng index fell by 2.7% whereas Japan’s Nikkei stood 1.1% lower. Markets in China and South Korea are expected to stay closed for the National Day Holiday on Monday.

Last week’s release of U.S economic data reflected growing consumer spending and growing factory output despite inflation and growing worries of central banks raising interest rates.

Photo: dougchayka