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  20 Sep 2021, 10:18

Asian markets sink ahead of Fed, Hong Kong plunges again

   HONG KONG, Sept 20, 2021 (BSS/AFP) - Asian markets fell Monday in holiday-
thinned trade, dragged by a range of issues including the Federal Reserve's
plans to taper monetary policy, surging Delta infections, China's regulatory
crackdown and signs of a slowdown in the global recovery.

  Hong Kong again led the losses on growing fears about the possible collapse
of troubled property giant China Evergrande -- which experts say could have a
painful spillover into the broader economy -- as interest payments on some of
its bonds come due.

   The selling followed another loss on Wall Street, where investors are also
tracking the progress of Joe Biden's multitrillion-dollar spending bills,
while there is unease that lawmakers have yet to raise the US debt ceiling,
risking the country defaulting on its own debt obligations.

   The Fed's policy meeting this week is being closely followed, with some
experts predicting it could set a timetable for winding in its vast bond-
buying programme put in place last year to support the economy and equity
markets.

   Officials have flagged they will begin tapering by the end of the year in
order to keep a lid on inflation, though it is yet to indicate by how much
and from when.

   Wednesday's announcement comes as several other central banks around the
world also prepare to make decisions, with many now considering tightening.

   The shift towards turning off the taps to financial markets comes as the
Delta variant continues to spread quickly around the world, forcing some
governments to reimpose lockdowns or other strict containment measures.

   Among them is China, where a new outbreak is raising concerns about the
effect on the recovery in the world's number-two economy, a key driver of
global growth. Another major headache for traders is the debt crisis at
Evergrande, which is on the brink of collapse owing more than $300 billion,
with many worried about a possible contagion that could hammer other property
firms, banks and small investors.

   Traders are keeping a nervous watch as the company is due to pay interest
Monday and Thursday on some of its loans and bonds.

   Despite the growing crisis, the government has yet to step in to prevent
it from going under.

   Analysts say that, while leaders are looking to curb excessive risk-
taking, they will probably work to prevent the issue from becoming
unmanageable.

   "The central government's priority of social stability makes restructuring
likely with haircuts for debt holders, but spillovers to other listed
property developers means there will likely be a real economy impact on the
real estate sector," said National Australia Bank's Tapas Strickland.

   "To what extent Evergrande slows the growth momentum remains unclear."

   Some of Hong Kong's biggest property firms tanked Monday, with Evergrande
more than 12 percent down while New World Development and Henderson Land
dived more than 11 percent.

   The city's Hang Seng Index sank more than three percent, while Sydney fell
more than one percent with Singapore, Wellington, Manila and Jakarta also
down. Tokyo, Shanghai, Seoul and Taipei were closed for holidays.

 

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