The Cambridge Weekly – 26th July 2021

Markets wake up to living with the virus

It has been a week of ups and downs. Last Monday saw sunshine and relaxation as so-called ‘Freedom Day’
COVID restrictions were lifted in England. Investors did not join in the party, though, as major equity
indices sold off around the world. Markets recovered most of those losses later into the week, but the
episode marked an unwelcome return of volatility. Unfortunately, that market volatility has been matched
by uncertainty in the underlying economy, as the spread of the virus continues to pose a threat to global
activity

China’s fortunes rebound as property crackdown accelerates

One of China’s top property developers is teetering on the edge. Evergrande Group, a Shenzhen based
developer that was the world’s most valuable real estate company in 2018, saw an almighty sell-off in its
share price last week, tumbling to a four-year low on Tuesday. What was once deemed to be one of the
company’s great strengths is now on the verge of destroying it. A patina of credit quality allowed it to
become Asia’s largest private issuer of US$-denominated bonds, built up in a huge spurt from 2015 to
2017.

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