Hong Kong’s Finance Minister Liu Kun said that the city’s exposure to debt-laden developer. China Evergrande Group is “very minimal” at 0.05%, or HK$14 billion ($1.79 billion), of banking assets. Financial Secretary Paul Chan said, “It is very minimal and won’t cause us any systemic risks,”.
He further added that he had come to this conclusion after a recently conducted audit of the local banking sector’s exposure to the property giant.
Chan explained that Hong Kong’s stock market was going to be inevitably subjected to some amount of volatility. Due to a recent mainland crackdown on a number of industries. But he believed any setback would be temporary and would not hurt in the long run.
Evergrande is China’s top property developer that has liabilities worth $305 billion. The property giant missed its deadlines in the last few weeks. Leading to speculation and concerns regarding its inability to pay off its debts throughout the global markets. It sparked concerns its cash crunch could spread through China’s financial system and reverberate globally. As the derailing of the world’s second-largest economy has the potential to roll over into markets all over the world. This worry of contagion, however, has eased with the Chinese central bank’s vow this week to intervene and protect homebuyers’ interests.
Evergrande has missed the deadlines of two bond interest payments in the last two weeks, according to bondholders. Furthermore, its offshore debt, amounting to nearly $20 billion, trades at distressed levels.
