China’s Evergrande default concerns loom large on nervous market

With Beijing not showing any signs of stepping in to help the developer, concerns over spillover risks remain high.

The risks of China’s Evergrande Group defaulting on its mountain of debt loomed large over nervous markets on Tuesday, as investors looked for signs of intervention by Beijing to stem any potential domino effect across the global economy.

Analysts played down the threat of Evergrande’s troubles becoming the country’s “Lehman moment”, though concerns about the spillover risks of a messy collapse of what was once China’s top-selling property developer have roiled financial markets.

“We believe Beijing would only be compelled to step in if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy,” according to an S&P report dated September 20. “Evergrande failing alone would unlikely result in such a scenario.”