Fitch warns an Evergrande default may have broad China economic effects
|Early Wednesday, Reuters came out with the warning from the global rating giant Fitch over Evergrande’s credit risk and impact on China’s economy.
Key quotes
Numerous sectors could be exposed to heightened credit risk if China's No.2 property developer Evergrande Group were to default, although the overall impact on the banking sector would be manageable.
The property market's sharp rebound from the COVID-19 shock last year has raised concerns about financial risks, but the array of tightening measures are taking a toll on the property sector, a vital source of Chinese economic growth.
Earlier this month, ratings agency Moody's downgraded its outlook on China's property sector to negative from stable due to tighter access to funding.
Shares of China Evergrande Group extend losses to third straight day to fall as much as 5.1% to HK$2.82, their lowest since January 2014.
FX implications
Following the news, USD/CNH remains on the front foot, keeping the initial rebound near $6.4400 level, up 0.08% intraday.
Read: USD/CNH Price Analysis: Bears can ignore latest rebound to 6.4400
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