How did Evergrande get so big? The company’s billionaire founder, Xu Jiayin, is affiliated with the Chinese Communist Party, most likely giving creditors more confidence to keep lending money as Evergrande rode the country’s epic property boom. Eventually, though, Evergrande amassed more debt — some $300 billion — than it could seemingly pay back. Now, Chinese regulators are cracking down on the aggressive borrowing habits of developers as China’s property market cools.
Could its troubles hurt the Chinese economy? A messy restructuring or default could hit confidence, drag down property prices and dent household wealth. It could also make it harder for other Chinese companies to finance their businesses with foreign investments. Avoiding that fate and containing the fallout could force China to backstop Evergrande, directly or indirectly.
How exposed are international investors? Ralph Hamers, the C.E.O. of UBS, said Evergrande’s troubles had “not been keeping me up at night.” (UBS is an Evergrande bondholder, but the bank’s direct exposure is “immaterial,” Hamers said.) Noel Quinn, the C.E.O. of HSBC, also an Evergrande bondholder, said the situation was “concerning” but that the bank hadn’t changed its approach to commercial real estate in China. On Wednesday, the Fed chair, Jay Powell, described Evergrande’s troubles as “particular to China.”
“The name of the game for these old guys is to show they are like her.”
— The Times’s Christopher Schuetze on how the two leading candidates to become Germany’s next chancellor, Armin Laschet and Olaf Scholz, have pitched themselves to voters ahead of Sunday’s election. Angela Merkel is stepping down after 16 years, and much is at stake for the next leader of Europe’s largest economy. Listen to “The Daily” for more on Germany after Merkel, and here’s what else you need to know about the vote.
A push to keep annual meetings virtual
Last year, roughly 2,000 public companies in the U.S. held their annual shareholders meetings virtually, according to Broadridge Financial Solutions. That was up from about 300 in 2019. Now, a group of shareholder activists are pushing companies to keep those meetings virtual, or add a remote option, permanently. They are having some success.