Jakarta, CNBC Indonesia – China’s central bank, namely The People’s Bank of China (PBOC) poured hundreds of trillions of yuan into China’s financial system. This is done to suppress the concerns of market participants about the crisis of the Chinese giant property company, Evergrande Group.
Bloomberg reported on Wednesday (22/9/2021), the PBOC injected 120 billion yuan (US$ 18.6 billion) or more than Rp 264 trillion into the banking system through reverse repurchase agreements. On a net basis, the injections given by the PBOC reached 90 billion yuan.
This action has made sentiment positive, especially since the Evergrande property business unit also plans to pay interest on the debt that matures this Thursday.
“The injection from the PBOC may be aimed at easing concerns in the market due to Evergrande. However, there is also a need to prevent the impact on the economy and other sectors,” said analyst at DBS Bank Singapore, Eugene Leow.
China did make the market calm, because almost all world stock markets fell due to fears of the Evergrande debt crisis. Even the Wall Street stock market in the United States (US) also briefly fell because of Evergrande’s sentiment, although a number of analysts said this crisis was not the same as the fall of Lehman Brothers.
The Evergrande property business unit is said to be negotiating with bondholders regarding the interest payment plan which will mature on September 23, 2021.
Uncertainty had developed among market participants about how Evergrande resolved its financial problems, with debts totaling US$ 300 billion or more than Rp 4,200 trillion. Moreover, the Chinese government has not provided a statement guaranteeing the settlement of the Evergrande problem.
Not only that, the problem of China’s economic slowdown also added to anxiety among investors. A number of analysts from major banks such as Citigroup, Barclays, and UBS Group, said the Evergrande crisis would not be like the collapse of Lehman Brothers.
“Currently the market is expecting the Chinese government to come up with a plan to help with corporate restructuring and financing will be smooth again. The bottom line is, China will not allow the Evergrande issue to turn into a financial crisis or allow this issue to trigger any systemic risk,” said Standard Chartered Plc’s chief economist in a statement. Hong Kong, Ding Shuang.
(wed/dru)
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