China may initiate restructuring of Evergrande Group, says Morgan Stanley

Citigroup too expects Beijing to help out Evergrande Group, the world's most indebted developer.

Beijing may initiate a managed debt restructuring of “a troubled property developer” in the coming week, followed by policy easing in October to contain spillover to the broader economy, according to Morgan Stanley economists.
 

“Regulators have had a mechanism to deal with defaults of property developers and reduce systemic risk,” economists including Robin Xing wrote in a note Tuesday. If these actions are delayed, there could be a one percentage point impact on China’s gross domestic product growth in the fourth quarter, warranting bigger stimulus in 2022, they added.

Others including Citigroup Inc. are expecting Beijing to help out China