Stock market sinks after Chinese property developer hints at default

BISMARCK, ND (KFYR) – The Dow Jones Industrial Average fell 972 points to its lowest point on Monday. Experts say the drop came after it was announced that a real estate developer in China, Evergrande, announced that it could not repay its debts.

After Evergrande announced it would default on its loans, stocks crashed around the world. Financial experts say the financial downturn is a side effect of the pandemic.

“[Due to the pandemic], the ability to pay for some of these exceptional construction projects has been restricted. So they have products, frankly, that just can’t be sold because of the pandemic. And then they have their cash flow – they would have to close properties and use that cash flow so they can pay off their debts and buy out their debts, but that kind of stopped sixteen months ago, ”said Eugene Graner. , President of Heartland Investor Services.

Another reason why experts say the market is down? A constant stream of bad news.

“I think they’ve just had a lot of negative headlines in the news lately, whether it’s COVID, or the situation in Afghanistan, or the situation with China. There’s just a lot of negativity out there, and the market isn’t immune to negativity, ”said David Wald, president of Securian Financial.

If there is good news about the market downturn, it’s that a drop in stock prices is typical for this time of year.

“Historically, September has not been good for the stock market. So people could just take chips off the table, ”said Wald.

Either way, Wald says the market will be worth watching in the coming days.

China is on federal holiday today, so their markets are closed. This means that foreign traders are wondering how the country will react when the market reopens on Tuesday.

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