The house of cards is coming down. And with it even stocks and other market assets across the globe with very little links to China.
The implosion of junk-rated property developer Evergrande, which are down 75% since May, has fuelled a continued global market selloff and even ignited talks that it may be China’s “Lehman Brother’s moment”.
But Citigroup, S&P Global and Barclays are among those who believe there will be casualties, but the Chinese government will take action to prevent the crisis from becoming its Lehman moment. S&P said in a report late on Monday it believes Beijing “would only be compelled to step in if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy… Evergrande failing alone would unlikely result in such a scenario”.
Back home, we’re preparing for another volatile day on the JSE, but the rand is showing some resilience, trading 10c firmer this morning at R14.72 against the US dollar amid the Evergrande onslaught and ahead of Thursday’s Reserve Bank decision on interest rates. The local currency has been hit by a triple whammy of China’s corporate debt woes, the rout in commodity prices and a strong dollar, moving it from being the best performing emerging market currency to the second worst behind the Turkish lira. “We can expect some consolidation in the rand as it remains a bit stretched for now. This week’s Fed FOMC and the SARB’s MPC meetings could impact the rand in the short term,” comments TreasuryONE.
And while the world is roiling, bitter about his Constitutional Court loss, convicted former president Jacob Zuma accused South Africa of becoming a ‘constitutional dictatorship‘, saying “laws and the constitution are being bent and manipulated to specifically deal with Zuma”. He is now planning to take the ruling of his incarceration to the African Court on Human Rights even though it does not have jurisdiction over the matter.
Here’s a roundup of the world’s top and most interesting headlines:
SA Business
La Vie en Rose: A single Mpumalanga company robbed SAPS of hundreds of millions in Covid-19 PPE tender – Daily Maverick
More South Africans will likely quit their jobs and emigrate in the coming months: expert – BusinessTech
US to lift travel restrictions on vaccinated South Africans – Fin24
Global Business
US ‘megacap’ tech selloff hits $600bn – TechCentral
Fortunes tumble from Seattle to Shenzhen in $135bn wipeout – Bloomberg
$1bn recovered for victims of Allen Stanford Ponzi scheme – 12 years after scam exposed – Sky News
Markets
Asian shares extend losses as China worries darken sentiment – ABC News
Dollar down, but all eyes on yuan head of China Evergrande “credit event” – Investing.com
Bitcoin falls below $43,000 as global market rout infects crypto – Bloomberg
Opinion/In-depth
A snake swallows its tail: Dissenting judges in Zuma rescission ruling failed to avoid the pitfalls of judicial decadence – Daily Maverick
How Zimbabwe landed a massive bumper harvest – The Conversation
Why is a rise in gas prices pushing up electricity costs? Energy crisis in four charts – Sky News
Video
Manhattan gets first whiskey distillery in 100 years – Reuters
Elon Musk, FOMO and an NFT auction domiciled in Ethereum – AusBiz
China pumps $14bn in cash into market amid Evergrande crisis – Al Jazeera
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