“New Lehman Brothers? No, but perhaps a generalized effect of distrust”

by time news

Evergrande, the new Chinese Lehman Brothers? The Chinese real estate group is approaching default. But “the Chinese financial system is not directly connected to the world system. There cannot be a flight of capital from Evergrande. They cannot escape from China due to a series of commercial and even financial barriers,” sinologist Francesco Sisci told time.news. Professor of geopolitics at Luiss, who excludes a “direct Lehman Brothers effect”, a repetition of the history of 2008, and speaks instead of the risks of a “generalized effect of distrust”, of the ‘absence’ of the Beijing government.

The problem, he observes, is that in the face of the risk of the Chinese giant’s crackdown “the government has not yet intervened, has not said anything and it is not known if and when it will intervene”. A situation that, according to Sisci, “can become worrying”. This, he continues, “does not create a flight of investments from China, but a progressive and generalized distrust of Chinese shares, of Chinese companies”.

And the repercussions are likely to be “serious” because there is not only “image” at stake since, Sisci continues, “China has dozens of companies listed outside, from New York to London, but also in Hong Kong. “and” if a doubt spread about the Chinese government’s action, of course this would have a generalized effect on all Chinese companies listed abroad “.

So far, the sinologist continues, “the Chinese government has not intervened because it is extremely complicated”. Sisci talks about what is a “more general Chinese housing market” problem. A “very opaque market where – he continues – the power of local governments and local banks prevails over the order of the market, over the actual purchases made by the middle class”. And, he concludes, “intervening in such a distorted market is not easy” ..

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