07.12.202107:42 Forex Analysis & Reviews: Evergrande is on the verge of bankruptcy again

The NASDAQ and S&P500 stock indices rose slightly on Monday, but so far remain within the correction. But the Dow Jones index has grown quite significantly over the past three days. In general, we can say that the US stock market was not too upset because of the weak Non-farms that came out on Friday, as well as because of the news concerning the Chinese developer Evergrande, who on Saturday announced that it had new problems with liquidity when repaying interest for $ 260 million. It should be recognized that the company is still afloat, although its total debt is about $ 300 billion and is the highest among all developers in the world. Many experts have repeatedly stated that the bankruptcy of Evergrande could provoke a new global financial crisis. The scheme is banal simple. If Evergrande fails to pay off its debts to several other companies, then these companies, in turn, may also begin to experience a liquidity shortage and will not be able to pay their debts. And this chain can be very long. Naturally, everything will not collapse because of one Chinese developer, but in 2008, when Lehman Brothers collapsed, the consequences were very serious and long. And now, when the economy of the whole world is pumped up with the money, inflation has swelled to unimaginable proportions, and humanity is on the verge of a new war with a new strain of "omicron". Of course, I don't want to believe in such a scenario, but this has already happened and will happen again. The only question is when?

However, it should still be recognized that at this time the markets practically do not react in any way to the news about the possible bankruptcy of Evergrande. Still, the company is trying to restructure its debts. Its shares, of course, are falling and have almost doubled in price this year, which again reduces the value of the company itself. Recall that it is not only the bankruptcy of Evergrande that makes you worry about the future. Many experts have noted throughout 2021 that the US stock market has swollen and now resembles a "bubble". The shares of many companies are too much overvalued, and the "bubbles" burst from time to time. Thus, so far, the US stock market is still undergoing a correction. Given that the Fed has not yet announced a faster curtailment of the quantitative stimulus program, the US stock market still has several months left during which it can show growth, as money will continue to flow into the American economy. However, next year, when rates start to rise, this may lead to a new, stronger correction in the stock market.