Evergrande, China's second-largest property developer, alerted banks last week that it would be unable to make debt payments due this month, sparking a sharp drop in the Chinese real estate sector. The losses quickly spread to broader markets as experts started warning its default could potentially create a Chinese "Lehman moment," market analyst Tom Essaye, author of the Sevens Report, wrote in a note last week, referring to the U.S. investment bank that collapsed at the onset of the Great Recession. "There isn't enough clarity on how Evergrande's challenges may affect the global economy and that uncertainty is enough to spook markets," wealth advisor David Bahnsen, of California's The Bahnsen Group, said in a Monday email.
Alongside historic adoption measures, buzz around the digital collectibles known as non-fungible tokens and concerns over heightened inflation have helped the cryptocurrency market pare back losses since regulation in China sparked a nearly 50% crash in early May, though it's still down nearly 25% from an all-time high four months ago. In a note earlier this month, JPMorgan analysts warned the recently booming market for smaller cryptocurrencies less established than bitcoin likely reflects "froth and retail investor mania," and pointed out such mania has historically resulted in corrections of nearly 50%.
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