The Globe and Mail reports in its Friday edition that Canada's largest pension funds and banks have limited direct ties to the Evergrande Group debt crisis, but there is little question the Chinese company's collapse would have painful knock-on effects, even if those indirect reverberations are difficult to quantify. A quadruple bylined item in The Globe says that on Wednesday, after Evergrande's inability to meet interest payments sent global markets tumbling, the company reached an agreement with domestic bond holders that appeared to ease investor concerns about contagion. China's central bank injected $18.5-billion (U.S.) in liquidity into the banking system, which brought further calm. Canadian banks have no direct lending exposure to Evergrande or to China's real estate sector, and the Big Six banks have less than 1 per cent of their equity capital -- about $1.4-billon combined -- in legal entities in China, according to a research note by Sohrab Movahedi of BMO Nesbitt Burns. Banks could have indirect exposure to counterparty risk in capital markets or to equity markets through wealth management, "but we estimate these to be insignificant to balance sheet and/or the earnings profile of the banks," he wrote.
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