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Evergrande

Could the Evergrande Debt Crisis Lead To the Meltdown of the Worldwide Financial markets?

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The impact on international market

Evergrande default would impact a lot the international market because there are lots of Evergrande debt holders. These include assets managers, international bonds funds, and other corporations such as the Ashmore group Plc who hold $400 million of Evergrande bonds, BlackRock Inc, and UBS Group.

With that being said, what happens if the contagion spreads to the rest of the Chinese, property developers, banks, and companies! in other words, what happens if these entities won’t be able to honor their debt. Would it be an imminent threat to the world economy since the internationals market is tied up to the Chinese? Not to mention that these major economic players had publicly traded equity on the international market. Markets such as Shanghai stock exchanges

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The default of Evergrande would extend to all markets including the crypto market.

Bitcoin as a risk on asset rather than a safe heaven

In a time of market stress, bitcoin acts as a risk-on asset rather than a safe haven. This means that investors would limit their exposure to the market uncertainty by selling their bitcoin holding. From the experience, we learned that bitcoin has a strong correlation with the equity market. 

Bitcoin is an asset that faces the same risk in a short term from the global financial contagion.

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