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The debt crisis engulfing China Evergrande Group has begun to dent homebuyer sentiment in China and force developers to cut prices. With liabilities of $305 billion, Evergrande has sparked concerns its problems could spread through China’s financial system and reverberate around the world – a worry that has eased as damage has so far been concentrated in the property sector.
Arthur Yuen, deputy chief executive of the Hong Kong Monetary Authority, told a conference these problems were unlikely to have a major effect on banks in the Asian financial hub.
“Both the industry and the media has been focusing a lot of attention on highly-leveraged borrowers, in particular some of the developers in mainland China. On that one, both the industry and ourselves have been paying a lot of attention to industry sectors that are under relatively greater stress in the past few years, so our banking system’s exposure to these highly-leveraged borrowers is not that high.”
“The risk there is pretty much manageable at the moment, but nonetheless we would urge the industry to remain vigilant,” Yuen said.
