tirsdag 9. november 2021

China's Evergrande debt woes could spill over to the US, the Fed says

The US Federal Reserve has warned that stresses in the Chinese real-estate sector from Evergrande's debt crisis could spill over to the US. In its Financial Stability report released on Monday, the Fed warned of high leverage at financial institutions and stretched real-estate valuations in China.

"In this environment, the ongoing regulatory focus on leveraged institutions has the potential to stress some highly indebted corporations, especially in the real estate sector, as exemplified by the recent concerns around China Evergrande Group," said the Fed in its report. Such stresses could spread to the Chinese financial system, through spillover to financial firms, a sudden correction in real estate prices, or a reduced investor risk appetite, said the Fed.