Stock market down after Chinese real estate developer hints at default
BISMARCK, N.D. (KFYR) - The Dow Jones Industrial Average fell 972 points at its lowest point on Monday. Experts say the drop came after news that a real estate developer in China, Evergrande, announced it can’t repay its debts.
After Evergrande announced it would default on its loans, stocks plummeted 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 outstanding build projects was constricted. So they have product, frankly, that just can’t be sold because of the pandemic. And then they have their cash flow - they should be closing on properties and taking that cash flow to be able to make their debt payments and buy down debt, but it kind of came to a halt sixteen months ago,” said Eugene Graner, president of Heartland Investor Services.
Another reason experts say the market is down? A constant stream of bad news.
“I think they 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’s not immune to negativity,” said David Wald, president of Securian Financial.
If there is good news to be found in the market declining, it’s that a dip in stock prices is typical for this time of year.
“September’s historically not been good to the stock market. So people just, might be taking some chips off the table,” said Wald.
Either way, Wald says the market will be worth keeping an eye on in the coming days.
China is on a federal holiday today, so their markets are closed. This means foreign traders are left wondering how the country will react when the market reopens on Tuesday.
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