Rise and Shine For The Week Ahead (20 Sep)
19 Sep 2021
"Hot" On The Plate
US stocks pulled back from record highs. This is the second consecutive weekly drop for US markets amid the seasonally weaker month for markets, as investors take profit after a good run for US stocks year to date. With data backing up to 1928, September has been the worst months for US markets with the average return for S&P 500 recording a loss of 0.99%.
Debt headache of China Evergrande. On the international front, China property stocks have been hammered on rising concerns of a default by the world’s most indebted property developer- China Evergrande. Evergrande’s stock is now down 90% from its 2020 high, as investors worry of a default by the developer, dragging our property developers along with it.
A default by China Evergrande has sparked concerns over the entire property sector, with concerns that it may also lead to a broader credit market meltdown. (Click here to read more on what went wrong at China’s Evergrande)
Coming Thursday (23 Sep), will see the interest payments on 2 China Evergrande notes due, with investors pricing in a high likelihood of a default (one of notes trading at less than 30% of face value). This will be a critical test of whether China Evergrande can stay afloat. Evergrande was also scheduled to pay interest on bank loans on Monday - however according to sources familiar with the matter, Chinese authorities have already told major lenders not to expect repayment as Evergrande and banks work to discuss the possibility of extensions and rolling over some loans.
Focus will also be turned on the US Fed Meeting which will be followed by a press briefing by Fed Chairman Powell on Wednesday (22 Sep). Most economists are now expecting a November Taper, while eying for clues on what the Fed will do in the latest meeting announcement.
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