Good morning! Today, a crisis at major Chinese property developer Evergrande could cause havoc to Brazil’s economy. Bolsonaro’s UNGA address is unlikely to gain international plaudits. The UK tells Brazil to up its environmental game. Amazonas governor in the dock for corruption charges.
Evergrande crisis a threat to Brazil’s real economy
Global markets faced mayhem on Monday amid investors’ concern about how the world’s two largest economies will act in response to threats against global recovery. In the U.S., worries center around the Federal Reserve’s potential cutback on huge government bond purchases. Meanwhile, in China, the problem is property development behemoth China Evergrande Group.
- Evergrande has roughly USD 300 billion in debt and USD 80 billion of that is due this week. Markets expect a “default of some kind.”
- The group has faced liquidity problems in the past, but this latest “crisis of cash flow and trust is unprecedented,” says Caixin. Per Asia Financial, an Evergrande collapse would cause shockwaves throughout China’s real estate sector and banking system, potentially triggering social unrest.
Why it matters. According to a Wells Fargo report published yesterday, the Brazilian economy and currency are among the most exposed to Chinese volatility.
- “An economic slowdown...