China's Evergrande Default Risk Hits Stock Exchanges Around The World

Ibovespa drops 2.33%; market recalled 2008 real estate crisis, but experts point out differences

The fear of a billionaire default by Evergrande, a giant in the Chinese real estate market, brought down stock exchanges worldwide. The Ibovespa, the main index of the Brazilian B3, retreated 2.33% and closed at 108,843 points.

The dollar rose 0.81%, quoted at R$ 5.3320. In the United States, Dow Jones, S&P 500, and Nasdaq fell 1.78%, 1.70% and 2.19%, respectively. In Europe, the Euro Stoxx 50 index (euro zone) retreated 2.11%. The London stock exchanges (-0.86%), Paris (-1.74%) and Frankfurt (-2.31%) also fell.

Evergrande, whose liabilities are estimated to be $355 billion, informed creditors last week that it would not be able to meet interest payments on the debt due on Monday (20).

Economists say the situation is serious, capable of bringing back the “ghost of the 2008 crisis,” as reported by Levante Research in a bulletin sent this morning to investors. In September 2008, the American bank Lehman Brothers went bankrupt when it recognized the insolvency of real estate credits. It failed to receive assistance from the US central bank, causing a domino effect of losses in financial institutions worldwide.

Translated by Kiratiana Freelon

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