Asian equities are trading in slightly a continuation of the downbeat global sentiment. After the worst day on Wall Street since May, Nikkei 225 plays catch up to the downturn, and several key markets remain on holiday, including China, South Korea & Taiwan. Also worth keeping in mind that markets have been trading more erratically since last week due to Quadruple Witching activity and participants heading to the final weeks of the Q3. On the radar for a few months since the Fed’s hawkish signals, participants are wary of the liquidity peak as QE tapering is now more alive than ever.
On the Evergrande front, several participants noted that Evergrande default could significantly drag the property sector, but it is far from being China’s Lehman Brothers moment. The debate of possible major correction in Develop and Emerging credit and equities markets if a credit event occurs. Worth keeping a close eye on the Chinese financial sector has direct exposure to Evergrande itself, its subsidiaries or its creditors.
