Jakarta, CNBC Indonesia – A hurricane hits the world’s capital markets. A number of the world’s major stock exchanges collapsed due to fears of potential default experienced by Chinese property giant Evergrande.
The weakening of global markets has occurred since yesterday, even to Wall Street. Today, Asian markets also opened lower, where investors continued to monitor the movement of the Chinese stock market, after being closed for two days due to a national holiday.
So what is the chronology?
It all started early last week. The company is reportedly threatened with defaulting on its debts.
This happens because the company is unable to sell its property assets to pay off debt. The value is fantastic, reaching US$ 300 billion, around Rp. 4,275 trillion.
Cash flow is under “tremendous pressure”. Evergrande also said two of its subsidiaries had failed to meet guarantee obligations for management products worth US$ 145 million or equivalent to Rp 2 trillion issued by third parties.
“That can cause cross-default,” the company said in a statement to the Hong Kong stock exchange.
Evergrande has actually partnered with Houlihan Lokey (China) Limited and Admiralty Harbor Capital Limited to try to evaluate the company’s liquidity. The company claims to be looking for the best way to pay its obligations.
“We are also talking to potential investors to sell some of their assets, but so far there is no progress,” he added.
This problem also makes investors nervous. They rallied to demand that companies repay loans and financial products they invested.
The investors were even angry and had time to surround the company’s office in Shenzhen. About 100 investors thronged the lobby of the company building, where more than 60 security personnel stood guard as the crowd shouted cursing at the company.
This case has shaken the Chinese property market. Evergrande’s debt, which is one of the largest in the world, has sparked fears of the risk of contagion to the already affected property sector overhead and the banking system.
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