CNBC’s Jim Cramer stated Monday he thinks beleaguered Chinese home designer Evergrande does not provide a significant threat to the U.S. economy and monetary system.
“Evergrande’s stock has been obliterated and that pain is spreading to the rest of the Chinese real estate industry, to the Chinese financial sector and to foreign banks with lots of China exposure,” the “Mad Money” host stated.
“Evergrande is definitely a systemic risk for China,” Cramer included, “but I don’t think that will do much damage here.”
Cramer’s remarks followed a high sell-off in the U.S. equity market, with the Dow Jones Industrial Average dropping 614 points, or 1.8%, onMonday The S&P 500 and tech-heavy Nasdaq sank 1.7% and 2.2%, respectively.
Concern about Evergrande defaulting on its large financial obligations and the capacity for monetary contagion was among the aspects weighing on Wall Street onMonday Despite Cramer not seeing broad U.S. financial dangers, he stated private business might definitely be affected by Evergrande’s problems.
“If Chinese real estate collapses, that’s bad news for the metals and mining complex — witness the breakdown in Freeport-McMoRan,” Cramer stated, describing the truth the Arizona- based business’s shares dropped 5.7% Monday.
“Plus, if this causes a full-on recession in China, then U.S. businesses with lots of Chinese exposure could get hit there. You’re thinking about a Starbucks, Estee Lauder, a Nike, Caterpillar,” Cramer stated, including it might perhaps even encompass Tesla and Apple.
On the other hand, Cramer stated he’s “not worried” about American banks since their access to the Chinese market has actually mostly been reduced.
“The bottom line? I don’t think the Evergrande fiasco will do serious damage to the U.S. economy, even as there are some groups that could get hit, but it does give investors a great excuse to do some selling,” Cramer stated. “Just sit this one out please, then you can buy stocks with zero China connection at better prices and not have to worry about a place you had never heard of until today called Evergrande.”
