APAC Market Update 22/09/21
Evergrande’s Liquidity Issues Continue
- The Evergrande Group, one of China’s biggest real-estate developers, owes more than $300 billion to a number of lenders. Its interest liabilities are rising by an average of $28 million daily. On Thursday, Sep. 23, alone, the company needs to pay around $120 million as interest payments to bondholders.
- If the government props Evergrande up, it might unwillingly signal a kind of acceptance, or even encouragement, of risky behavior. Other companies can interpret the bailout as reassurance that, if they ever wish to fly too close to the sun, the government will always be there to save them.
- At the same time, the cost of not keeping Evergrande afloat might be a high one too. The markets are worried about the contagion effect that an Evergrande collapse will have on the economy.
China Hopes to Join the Transpacific Pact
- Japan has said China’s “readiness” to join a transpacific trade pact originally designed by Washington to limit Chinese influence in the region would need to be judged on its merits after Beijing filed a surprise formal application to join the group.
- Beijing would need to meet the deal’s requirements in areas related to intellectual property, state subsidies and state-owned enterprises.
- The predecessor of the CPTPP was the Trans-Pacific Partnership, a trade agreement signed in 2016 by the US, Australia, New Zealand, Japan and seven other countries.
Japan Trials in Easing Travel Restrictions for Unvaccinated
- Japan so far has refused to relax its 14-day quarantine request for travelers from overseas even as other major economies move to waive such requirements for the vaccinated.
- Following a request from top business lobby Keidanren this month, Tokyo has signaled its intention to gradually ease the restrictions. It is considering shortening the quarantine duration but remains reluctant to waive it altogether.
- This is because delays in easing travel restrictions would prevent business travelers from coming to Japan. Japanese professionals would also balk at going overseas because they face a 14-day quarantine upon returning.
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