World stocks sank on September 20 as trading floors were gripped by contagion fears from the expected collapse of debt-plagued Chinese property giant Evergrande.
Hong Kong dived 3.3 per cent, spearheading Asian losses, with Evergrande widely expected to default on upcoming interest payments this week. Europe tanked, with London losing 1.6 per cent and Paris down 2.2 per cent, while Frankfurt’s newly expanded index dropped 2.3 per cent in early afternoon deals.
Evergrande, one of China’s biggest developers, is on the brink of collapse as it wallows in debts of more than $300 billion.
Mining shares were hard hit because of the potential economic impact on China, which has a voracious appetite for raw materials.
“Evergrande … appears to be teetering on the precipice with concerns about contagion from the situation infecting the wider economy in China,” said AJ Bell analyst Russ Mould. “Any downturn in China would have significant implications for commodities demand given its status as the world’s largest consumer of many minerals and metals.”