Global stocks sink on Evergrande contagion fears

Fears about a contagion from the possible collapse of China Evergrande have sent property firms in Hong Kong plunging. AFP/Peter Parks

LONDON - World stocks sank Monday as trading floors were gripped by contagion fears from the expected collapse of debt-plagued Chinese property giant Evergrande, with investors also on red alert over spiking wholesale gas costs.

Sentiment is being dented by strong inflation, the Federal Reserve's plans to taper monetary policy, surging infections with the Delta variant of coronavirus, and signs of weakness in the global recovery.

Hong Kong dived 3.3 percent, spearheading Asian losses, with Evergrande widely expected to default on upcoming interest payments this week.

Europe tanked, with London losing 1.6 percent and Paris down 2.2 percent, while Frankfurt's newly expanded index dropped 2.3 percent in early afternoon deals.

World oil prices shed about two percent on energy demand worries.

- Evergrande meltdown risks -

"Contagion risks from the Evergrande meltdown are the prime cause of today's sell-off," said Markets.com analyst Neil Wilson.

"It is definitely though a major cause for investor concern right now and it is possible we see further losses."

Evergrande, one of China's biggest developers, is on the brink of collapse as it wallows in debts of more than $300-billion.

Mining shares were hard hit because of the potential economic impact on China, which has a voracious appetite for raw materials.

"Evergrande... appears to be teetering on the precipice with concerns about contagion from the situation infecting the wider economy in China," said AJ Bell analyst Russ Mould.

"Any downturn in China would have significant implications for commodities demand given its status as the world's largest consumer of many minerals and metals."

Source
AFP

Paid Content