Pressure on the stock markets because of the Evergrande crisis and perfect performance for oil and gold
Pressure on the stock markets because of the Evergrande crisis and perfect performance for oil and gold: Despite additional information of concern from Evergrande divisions about the poor financial situation,
the impact on public market morale has been tempered by massive liquidity from Chinese authorities,
with high expectations that the company’s business restructuring would be orderly.
Markets are also waiting for positive news from the US Congress,
where they discuss the budget and raise the national debt until the end of September when the US ends the fiscal year.
Evest follows developments in the trading markets in the following report:
Topics:
Evergrande supports the commodity market and puts pressure on the stock markets
Gold rises because of the Evergrand crisis
Oil rises for the fifth consecutive session
The cryptocurrency market is quickly offsetting its losses
Evergrande supports the commodity market and puts pressure on the stock markets
Investors continue to monitor developments around the Chinese Evergrande’s debt problems,
the potential for the company to default, as well as the spread of Chinese corporate debt problems in the global economy, adding uncertainty to markets.
The People’s Bank of China provided banks with another portion of the funds – 100 billion yuan ($15.5 billion) on Monday, as part of reverse buybacks to ensure adequate liquidity in the banking system.
The Central Bank of China said in a statement that the 14-day interest rate on transactions was 2.35% per year. Over the past week,
China’s central bank has injected 320 billion yuan into the country’s financial system.
Evergrande’s crisis situation
Chinese electric car manufacturer New Energy Vehicle Group Ltd, also known as Evergrande Auto, s
aid it had canceled plans to list in Shanghai amid financial problems at its parent company, the developer China Evergrande.
The press release said that the process of issuing class A stocks “will not continue any further.”
without mentioning the reason for this decision.
A year ago, New Energy Vehicle announced that it planned to include shares in the Shanghai Science and Technology Innovation Council, known as STAR.
The company plans to issue up to 1.56 billion stocks.
At the end of last week, New Energy Vehicle reported that it faced a “severe funding gap” and may not meet its financial obligations.
The company talked about negotiations with new investors about potential financing and discussions about selling a number of assets in China and abroad.
Evergrand is about to default after years of massive growth and heavy borrowing.
The decline in sales, as well as actions taken by Beijing to curb the recovery of the Chinese housing market, contributed to the fact that the company found itself in a crisis situation.
At the end of June, the company debt accounted for $304 billion.
Gold rises because of the Evergrand crisis
Gold prices rose on Monday as concerns continued over the fate and wider impact of the heavily indebted real estate company China Evergrand,
boosting the attractiveness of precious metal as a safe haven.
Spot gold rose 0.5 percent to $ 1757.79 per ounce by 01:27 GMT, while US gold futures rose 0.3 percent to $ 1757.30.
Variation in Asia’s Markets
The pressure on the stock market last week was due to the situation with Chinese developer Evergrande.
On Thursday, the company was supposed to pay interest on dollar bonds, however, it did not, as reported by the Wall Street Journal.
In Asia, stock index dynamics were also mixed on Monday, with Japan’s Nikkei 225 declined by 0.03%, China’s Shanghai composite 0.9% and Hong Kong’s Hang Seng rose by 0.1%.
Investors are under pressure with the spread of the Covid-19 virus.
While some countries around the world are gradually lifting the restrictions imposed by the coronavirus pandemic and returning to normal life,
there are still concerns in Asia about potential due to relatively slow vaccination rates.
Oil rises for the fifth consecutive session
On the oil market, prices rose for the fifth consecutive session this Monday morning,
backed by continued supply concerns as demand increased in several regions of the world amid the easing of restrictions on the coronavirus epidemic.
The price of Brent crude on Monday was $1.3 higher than the level recorded at the close of the main trading on Friday.
Brent crude futures’ cost for November was $79.11 per barrel (+ 1.3٪ and + 1.1٪ on Friday),
and the price of West Texas Intermediate crude for November was $74.95 per barrel (+ 1.3٪ and + 0.9٪ on Friday).
Over the past 12 months, prices have gained more than 80%.
Bloomberg writes that the additional driver for rising oil prices is the shortage of natural gas supplies, particularly in Europe,
which could affect the entire energy complex in winter. Goldman Sachs expects oil prices to rise to $90 per barrel.
The cryptocurrency market is quickly offsetting its losses
The cryptocurrency market made a rapid comeback from last week’s turmoil over China’s latest crackdown,
with currencies such as bitcoin and Ethereum offsetting most of their losses on Monday.
Bitcoin rose to about US $44000 close to the high when the People’s Bank of China announced its latest step in curbing the cryptocurrency on Friday.
Ethereum broke above last week’s level of $3 100.
Cryptocurrency markets were troubled on Friday when the People’s Bank of China (PBOC) issued a new restrictive ban on transactions and mining,
in cooperation with several other state agencies.
This move suggests that China’s policies may move towards a more serious and coordinated level.
Meanwhile, previous data from Beijing did not fully rule on bans on cryptocurrencies in the country,
so some traders were more optimistic about the impact.