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  21 Sep 2021, 10:37

Asian markets stabilise after rout but Evergrande fears linger

  HONG KONG, Sept 21, 2021 (BSS/AFP) - Equities fluctuated in Asia on

Tuesday, with investors nervously keeping an eye on troubled property giant
China Evergrande after fears over its possible collapse sparked a rout across
global markets.


 The crisis at one of China's biggest developers added to an already downbeat
mood on trading floors, where dealers were also juggling an expected
tightening of monetary policy by the Federal Reserve, rising Covid infections
and a slowing global recovery.

   Meanwhile, a battle in Washington to raise the US debt limit was also
fuelling concern that the government could miss payments on its debt
obligations, sparking a disastrous default.

   Hong Kong-listed real estate firms, which took the brunt of the selling on
Monday, tanking more than 10 percent, managed to squeeze out gains in the
morning as bargain-buyers moved in. But there remains a lot of uncertainty.

   Attention is on what happens next in the Evergrande saga, with the firm --
which is wallowing in debts of more than $300 billion -- due to pay interest
to bondholders on two notes on Thursday. Most experts expect the firm to
default on the payments, though it does have a 30-day grace period
afterwards.

   Still, analysts said the nervousness on markets comes from a lack of
clarity from leaders in China, which was observing a national holiday on
Monday and Tuesday.

   Evergrande's woes have been exacerbated by strict new rules introduced by
Beijing to rein in runaway debt at the country's developers, essentially
cutting off the firm's ability to finish its properties and make cash.

   "Even though most people don't expect Evergrande to collapse all of a
sudden, the silence and a lack of major actions from policymakers is making
everyone panic," Ding Shuang, at Standard Chartered, said.

   "I expect China to at least offer some verbal support soon to stabilise
sentiment."

   - US default warning -

   Hong Kong's Hang Seng Index, which plunged more than three percent Monday,
edged up 0.2 percent.

   Henderson Land, New World Development, Sino Land and Sun Hung Kai
Properties all rose, while Macau-based casino operators also enjoyed gains
after last week's crash fuelled by plans for a government crackdown on the
industry. There were also gains in Sydney and Singapore.

   Tokyo lost two percent as traders returning from a long weekend played
catch-up with Monday's global sell-off. Wellington, Manila and Jakarta also
fell.

   Aside from Evergrande, focus this week is on the Fed's latest policy
meeting, with observers predicting it will set out its timetable for tapering
the vast bond-buying monetary easing programme that has been a key driver of
a global recovery for more than a year.

   Officials have flagged they will begin winding back this year as they look
to temper surging inflation but the prospect of the punch bowl being removed
is tempering that rally.

   "Markets are clearly having some angst on the potential spillover effects
from Evergrande, along with some nervousness over the September (policy)
meeting," said Cliff Hodge, of Cornerstone Wealth.

   "We've been in the camp that we're overdue for a correction, something in
the five to 10 percent range that is a buyable pullback. At the moment, we're
not worried about a market crash. The Fed and Evergrande are not new."

   All three main indexes on Wall Street ended well in the red Monday.

   There is a growing concern that US lawmakers will not reach an agreement
to raise the country's debt ceiling to keep the government running and pay
its bills, with Republicans against the move.

   Treasury Secretary Janet Yellen warned in an article for The Wall Street
Journal that a default would "likely precipitate a historic financial crisis
that would compound the damage of the continuing public health emergency".

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