China Evergrande (3333.HK)'s debt risks continue to accumulate, which has put a lot of pressure on Hong Kong stocks in the past few days, and finally spread to the United States yesterday, triggering a collapse in the United States. As of the market close, Dow plunged 614.41 points or 1.78%, and fell 840 points during the intraday session, marking the biggest one-day drop since October 28, 2020. The S&P 500 Index also fell 2.4%, while the VIX Panic Index, which was the opposite of S&P , soared 23.55%.
A series of issues detonated risk sentiment, and global stock markets were all sold off
There are two main focus of current market worries. One is the troubled Chinese real estate market. Due to Evergrande’s rising risk of default, the Hong Kong stock Evergrande concept stock fell. China Evergrande fell by more than 12%, Evergrande Motor fell by more than 6%, and Evergrande Property fell by more than 5%.
The risk derived from Evergrande also affects Hong Kong's property stock . Among them, Sony Holdings (2103.HK) fell more than 90% in intraday trading yesterday, and its market value evaporated by HK$12 billion in a single day. . In addition, well-known property stocks in Hong Kong also fell, New World Development (0017.HK) and Sun Hung Kai Properties (0016.HK) fell more than 10%.
The weakness of real estate stocks triggered a big market trend in Hong Kong stocks. Yesterday, the Hang Seng Real Estate Index plunged 5.4%, its lowest since 2016. The Hang Seng Index once fell below the 24,000-point mark in intraday trading, and finally closed at 24,099.14 points, down 3.30%.
This kind of crisis awareness and risk sentiment also spread to the US stock market yesterday.The three major indexes all fell, among which the S&P fell nearly 2.4%, while the VIX panic index, which is the opposite of the S&P 500 index, soared for several days. It rose to 28.20 points in intraday yesterday, and finally closed at 25.71 points, up 7.01 points or 37.49%.
According to analysis, the core concept of the VIX panic index is to reflect the implied volatility of the S&P 500 index in the next 30 days. When the value is higher, it means that investors are uneasy about the prospects of the stock market.
AJ Bell’s investment director Russ Mould said that Evergrande currently seems to be teetering on the edge of a cliff, and investors in the international market are worried that this situation will spread to China’s broader economy and affect the world economy.
In addition to the Evergrande incident, another event that worries the market is the resolution held by the Federal Reserve on Wednesday. Due to the soaring inflation in the United States and the improvement in the job market, investors believe that the Fed may be ready to start curtailing measures.
However, Vishnu Varathan, head of economics and strategy at Mizuho Bank , said that the Fed should continue to maintain quantitative easing at this week’s meeting because the non-agricultural employment situation in August was disappointing and also appeared. Some economic indicators are weak, which may delay the time for to shrink .
[Disclaimer]: The content published in this headline number does not constitute any investment advice, and is only for investors' reference! No intention to target any nationality!
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