China's Evergrande liquidation is 'trillion dollar problem'



China’s largest property developer Evergrande (3333.HK) faces liquidation after courts deemed the enterprise incapable of delivering on restructuring plans. The Chinese economy contends with uncertainties as officials attempt to inject a stimulus package of $278 billion (2 trillion Chinese yuan) back into markets.
Meyer, Unkovic & Scott Partner Dennis Unkovic comments on contagion fears associated with Evergrande’s liquidation for both China’s property sector and its markets.
“It reminds me a little bit of the Lehman Brothers moment. When Lehman Brothers went down, there was a question about how it would spread. You have other companies like Evergrande, for example, Country Garden (2007.HK), that have similar debts,” Unkovic says. “Country Garden is now the largest private real estate enterprise in China, and it has similar problems to Evergrande. The problem is it isn’t over, and it really may just be beginning.”
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