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Mr Lyddon, founder of Lyddon Consulting Services Ltd, told Express.co.uk: \u201cThis Chinese company has about $200 billion [\u00a3157billion] of debt and it missed a debt payment.<\/p>\n
\u201cIt is a massive real estate concern and the second one, after Evergrande, to get into difficulty.\u201d<\/p>\n
Missing a payment did not mean the company was is in default and the lenders could still repossess and try and sell its properties, Mr Lyddon stressed, adding: \u201cIt has 30 days to find the money and cure its failure to pay.\u201d<\/p>\n
However, he added: \u201cIt is not a good sign.<\/p>\n
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\u201cChina appears to be in considerable trouble, the banks will not want to repossess all those properties and try to sell them all together at this time in a falling market.<\/p>\n
\u201cThat is the sort of thing that causes a rout.\u201d<\/p>\n
He continued: \u201cIt would be nice to know how much HSBC is exposed, although it would not be within the ring-fenced UK bank.<\/p>\n
\u201cThe contagion could be on the value of real estate worldwide, and that would not be nice for the UK, and on Chinese banks who are very large and whose financial strength is questionable given state control and accounting standards.<\/p>\n
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Don’t miss… <\/strong> \u201cWhich UK banks are heavily exposed to Chinese banks?<\/p>\n \u201cWe don\u2019t know, but HSBC and Standard Chartered certainly and probably Barclays and NatWest as well.<\/p>\n \u201cLloyds and Santander less likely.<\/p>\n \u201cSo there is a definite spillover potential.\u201d<\/p>\n Coming into this year, the expectation was that China’s economy would grow enough after the government removed anti-COVID restrictions to boost a global economy weakened by high inflation.<\/p>\n However, China\u2019s recovery has faltered so much that it unexpectedly cut a key interest rate on Tuesday and skipped a report on how many of its younger workers were unemployed.<\/p>\n Across the Atlantic, worries about the knock-on effects for the rest of the global economy are weighing on Wall Street, where stocks have already been retrenching in August.<\/p>\n
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