European stock markets weak, Evergrande collapses in Hong Kong

A fresh collapse of Evergrande, which has been embroiled in a solvency crisis for over two years and is searching for a solution, plunges the entire Chinese real estate sector and the Hong Kong stock market into a sharp decline. The stock fell almost 21% after the company officially announced that it would not be able to issue new bonds – debt instruments – due to ongoing investigations into one of its Chinese subsidiaries for alleged violations of transparency rules.

A nasty surprise for international creditors, since one of the solutions proposed in the renegotiations was to replace the unrepaid bonds with new ones with a longer maturity. The fears are also impacting European markets, which opened weakly and extended their losses later in the session: Milan is now at -0.95%, -0.7 for London and Frankfurt, -0.8 for Paris. Monetary policy concerns also weigh heavily: It’s true that the Federal Reserve didn’t raise interest rates last week, but some board members were keen to emphasize that this isn’t necessarily a permanent stop.

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