The Evergrande liquidity crisis is, as of now, an unresolved financial crisis centered around the financial difficulties of Chinese property developer Evergrande Group. For a long time, a possible bankruptcy of Evergrande has caused turmoil on the stock market, and earlier this week the company missed another installment on its huge debt.
But even if Evergrande collapse, Danes do not have to fear for their pensions savings as they are placed in other assets too, Andreas Østergaard Nielsen says to BT. Andreas Østergaard Nielsen is Head of analysis at ‘Forsikring & Pension’ which is the Danish trade association for insurance and pension companies.
“It will probably only be a temporary crisis in the financial markets if Evergrande goes bankrupt plus Danes’ pensions are also invested in many assets other than shares. Assets that go free,” he says.
The major problems in China’s real estate market have recently gained international attention due to fears of the consequences. With a debt of $ 300 billion, the giant Evergrande has become the most high-profile example and several have linked the situation with the crash of the American investment bank Lehman Brothers in 2008, which helped trigger the financial crisis.
However, it is unlikely that a crash in Evergrande will lead to an actual financial crisis, assesses Andreas Østergaard Nielsen. It can cause waves in the stock markets but the Pension Funds are long-term investors and are therefore not forced to sell for that reason.
Moreover, Andreas Østergaard NielsenIt does not believe that customers close to retirement are particularly vulnerable in the event of bankruptcy. “Those close to retirement do not have that many shares in the pension investments. So they will not be hit so hard by unrest here,” he assesses.
Chinese Evergrande has struggled for several months to raise capital for the payments. The company has not officially announced what will happen next.