How to Prepare Your Portfolio for the Collapse of Evergrande

I’ve had a lot of people ask about Evergrande lately.

The company is the second largest real estate developers in China. It’s worth over $500 billion and its debts account for 2% of China’s GDP. It’s also the most debt-saddled property developer in the world.

And it’s about to go bankrupt, which could pose systemic risks to the global financial system.

That means we should gameplan on how to protect our portfolios.

The Biggest Bankruptcy Since Lehman Brothers

China’s central bank noted in 2018 that Evergrande posed a systemic risk to the nation’s financial system.

After accumulating over $300 billion in debt, the central bank recognized Evergrande had grown too bloated for its own good. Since this warning, Evergrande’s sales growth has fallen while regulatory scrutiny on the property sector has increased, dealing a blow...