CHB - The Great Reckoning - Reflecting On The Evergrande Saga

• China’s economic growth deceleration, triggered by a zero-COVID policy and multi-faceted regulatory tightening, has been of increasing concern to global markets.
• Evergrande's stock price has been on a downtrend since its peak in 2017. Since February 2021, the deterioration accelerated as the “three red lines” regulations intensified.
• The Evergrande crisis is a deflationary shock to the Chinese economy, even though we do believe Chinese policymakers have the wherewithal to avoid a systemic risk.

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