Evergrande Property Services Group Ltd (HKG: 03333) is under a massive debt crisis. Debt-laden property developer Evergrande has put global markets on a high alert as all markets are interconnected. However, European Central Bank President Christine Lagarde on Thursday confirmed that Europe had restricted direct exposure to the debt trouble that the Chinese company is reeling under at present.
European Central Bank is monitoring developments as they unfold
In conversation with CNBC’s Annette Weisbach in Frankfurt, Germany, European Central Bank President Christine Lagarde on Thursday said:
“We are looking at it. We are monitoring and I had a briefing earlier on today because I think that all financial markets are interconnected. I have very vivid memories of [the] latest stock market developments in China that had a bearing across the world. But in Europe and in the euro area, in particular, direct exposure would be limited.”
When questioned if the ECB was ready for the anticipated global impact that could occur due to the collapse of Evergrande, Lagarde stated that she could not speak for the U.S. and added that the direct exposure Europe has is limited.
U.S. Federal Reserve Chair Jerome Powell stated that Evergrande’s debt problems are to do with China. Speaking to reporters on Wednesday, Powell informed that he does not witness a parallel with the U.S. corporate sector.
Shares of Evergrande in Hong Kong fell around 7% on Friday
Local officials are cautioned to brace for the potential demise of Evergrande, The Wall Street Journal reported on Thursday. Meanwhile, shares of Evergrande in the Hong Kong market plunged around 7% on Friday. Market experts echo the sentiments that Evergrande’s liquidity crisis which shows no improvement, can have a ripple impact on the global economy. However, they are optimistic that the Chinese government will take the responsibility to contain the issue.
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