Wall Street had one of its worst days in months, driven by fears a massive property developer in China is about to default on its debt.
China Evergrande Group roiled U.S. markets Monday on news it likely can’t come up with millions of dollars in interest payments due this week. The Fortune 500 company is sitting on a mountain of $305 billion in debt.
If Evergrande collapses under its debt burden and Beijing does not bail out the real estate giant, the ripple effects will be felt well outside of China. Some experts are comparing the Evergrande crisis to the fall of Lehman Brothers back in 2008.
Investors worried about contagion quickly reacted to move money to safer places amid Evergrande’s uncertain future and its effect on China’s market. (Contagion is a financial term that describes when an economic crisis from one market spreads to another.)
On Monday, the S&P 500 closed down 1.7%, its biggest drop since May. The Dow Jones Industrial Average shed more than 600 points in a 1.8% drop, its biggest decline since July.
