Evergrande default a signal to other cos to fix balance sheets; Chinese policies cue here: JPMorgan

Jahangir Aziz, head-emerging markets economics research and commodities at JPMorgan, on Wednesday, said that Evergrande (property developer in China) default is a signal to other companies to fix their balance sheets.

“This is a very large default, I will admit, but this is not the only default. This default has been used as a signalling device to the other corporates, particularly in the property market to start fixing their balance sheets,” Aziz said, in an interview to CNBC-TV18.

According to him, the cue from Evergrande should be what the Chinese have been indicating in their policies. “I don't think that Evergrande per se is the event. The cue that we should take from it is what the Chinese have been indicating, at least for the last three years, which is their regulatory policies. I am including housing policy and other regulatory policies, which were used as a counter-cyclical supplement to monetary and fiscal policy. Regulatory policies instead have been used for long-term objectives,” Aziz said.