Evergrande in China: what you need to know

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One of the largest Chinese lenders, Evergrande Group, faces billions in debt with the threat of default. The crisis sends shockwaves through global financial markets, including the United States, where the company is compared to Lehman Brothers, whose implosion in September 2008 triggered the Great Financial Crisis.

FOX Business looks at Evergrande’s business and its role in the global financial system.

EVERGRANDE GROUP

Evergrande is one of China’s leading lenders for everything from real estate to automobiles. The company has 2.3 trillion Chinese yuan in assets, which is equivalent to about 355 billion US dollars, according to the lender, which employs 200,000 workers.

By 2022, Evergrande hopes to reach 3 trillion yuan in total assets, 1,000 billion yuan in annual sales and 150 billion yuan in annual profits and taxes to become “one of the 100 largest companies in the world. world “.

FACING THE DEFAULT ON BILLIONS

Rating agencies say Evergrande Group seems unlikely to be able to repay the full 572 billion yuan ($ 89 billion) it owes banks and other bondholders, as the Associated Press reported , who also noted that Beijing is likely to step in to prevent systemic damage.

“I suspect the Chinese government is on top of this, and I have no doubt they will treat it harshly, but I don’t think it will have the global effects that the market is suggesting this morning,” Carlyle Group co said. – founder David Rubenstein during an appearance Monday on “Mornings With Maria”.

A US investor in China told FOX Business that “almost all banks in China are exposed to the company,” which explains the heightened fears of contagion.

AMERICAN INVESTORS?

According to Factset data, BlackRock has stakes in Evergrande in several units, while Goldman Sachs, JPMorgan and JPMorgan have small fractional stakes. “I don’t think the big US banks have to pay a lot of money,” Rubenstein noted.

FOX Business requests to these banks were not immediately returned.

Teleprinter Security Last Switch Switch %
BLACK BLACKROCK, INC. 848.42 -27.06 -3.09%
SG THE GOLDMAN SACHS GROUP, INC. 374.67 -16.40 -4.19%
JPM JPMORGAN CHASE & CO. 152.21 -5.55 -3.52%
SG THE GOLDMAN SACHS GROUP, INC. 374.67 -16.40 -4.19%

THE DEFENSE OF EVERGRANDE, MANAGING THE CRISIS

As the lender’s crisis continues to unfold, he has tried to allay investor fears.

“The recent online remarks about Evergrande’s bankruptcy and reorganization are totally bogus,” the company said on September 13. the delivery of buildings, try all means to resume normal operations, and fully protect the rights and legitimate interests of customers ”

Evergrande Group Chairman Xu Jiayin attends a press conference with new Guangzhou Evergrande head coach Fabio Cannavaro on November 9, 2017, in Guangzhou, China’s Guangdong Province. (Photo by Visual China Group via Getty Images / Visual China Group (/ Visual China Group via Getty Images / Getty Images)

EVERGRANDE PRESIDENT & STOCK

Xu Jiayin, also known as Hui Ka Yan, is among the richest people in China with a net worth of over $ 10 billion. according to Forbes. Xu listed the lender on the Hong Kong Stock Exchange in 2009.

According to a company biography:

“61 years old, Chairman of the Board of Directors of the Group and Chairman of the Real Estate Group, Professor Xu coordinates the overall development strategy of the Group. He has more than 37 years of experience in real estate investment, property development and management. Professor Xu has been a professor of management at Wuhan University of Science and Technology since 2003 and was hired as the school’s thesis director in 2010. ”

The Associated Press contributed to this report.


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