Reply With Quote
good point.
great instability/adversity offers great opportunity for those with ready cash.
Markets freaked out because those controlling the market saw a good opportunity in the news to create a buying opportunity.
good point.
great instability/adversity offers great opportunity for those with ready cash.
"Bear Stearns moment"
I've got a bad feeling about this
It's unclear to me whether the CCP will pull their bacon out of the fire, how does it look to you?
Business Insider
Chinese property developer Fantasia just missed a $206 million repayment deadline, a sign that China's real estate woes extend beyond Evergrande
Fantasia Holdings, a Chinese property developer, failed to pay $206 million in loans on Monday.
Just two weeks ago, Fantasia's chairman said the company had no liquidity issues.
The default indicates that real estate giant Evergrande is not alone in battling a mountain of debt.
https://news.yahoo.com/chinese-prope...025112615.html
They are going to try.
It ultimately depends on how large the bubble is that they have created.
Any bubble that builds whole speculative CITIES... implies a very large bubble. [emphasis on the plural there]
My gut says it is larger than the Chinese government can really handle, and/or that their inexperience will play a factor in picking bad solutions.
Dunno. Predicted a bubble a decade a ago, as has rightly been pointed out here, so I am less confident in calling it now.
That said: my spidey-sense is telling me it is going to get bad, but the opaqueness of their system means we can't have any degree of certainty.
LONDON (Reuters) - Investment bank JPMorgan has estimated that troubled Chinese property giant Evergrande and many of its major rivals have billions of dollars worth of off-balance sheet debt that, once added on, ramp up their leverage ratios.
JPMorgan's China and Hong Kong property analysts said the tactic is likely to have been used to help firms look like they were conforming with new borrowing cap rules introduced last year, but Evergrande's case looks the most extreme.
"Instead of true deleveraging, we think Evergrande has shifted some of the interest-bearing debt to off-balance sheet debt," JPMorgan's analysts said. "Commercial papers, wealth management products and perpetual capital securities, etc, which are not officially counted as debt."
They estimated Evergrande's "net gearing," as debt as a ratio of a firm's equity is known, was at least 177% at the end of the first half of the year, instead of the 100% its accounts reported.
"It is possible that the real gearing could be even higher, as data on some off-balance sheet debt is not publicly available," JPMorgan added, saying the "disguised" debt as it called it added up to 55% of Evergrande's overall debt.
Other major firms whose gearing levels were likely to be higher than formally reported included R&F Properties at 139% versus the 123%, Sunac China Holdings at 138% versus 87% reported and Country Garden at 76% versus 50% reported.
(Reporting by Marc Jones, Editing by Nick Zieminski)
------------------------------------------------------------
The knock on effects are going to be larger. This is a case of falling dominos, IMO.
shrewd take
Pretty much. Which is why they will never go to war with us, and why we need to press them on human rights.
Just how much would this be in rent per month/year in terms of $USD? I might be looking for a new place to live soon...
Yeah one of the many drawbacks of globalization is the greatly reduced possibility of nuclear warfare which is needed for a change in humanity...... like what happened when Truman plopped 2 of 'em on Japan in 1945.
https://mishtalk.com/economics/a-5-t...aw-commoditiesThink of the implications a property bust of this magnitude will have on steel, copper, concrete, and Chinese GDP targets.
China had largely been dependent on Australia for raw commodities, that tidal wave of Chinese Debt is About to Sink Australia’s Economic Recovery.
Australia’s economic growth continued year after year, with no sign of a recession, and money sloshed around all sectors of the economy until the pandemic hit and almost everything slowed to a crawl. I say almost everything because iron kept being dug up at a rapid pace, along with copper ore and coal, to meet strong demand from the Chinese property sector and railway expansion, which also drove a strong upward trend in prices. In 2020, iron ore alone made up 41 per cent of all exports from Australia by value, at about A$149 billion.
Unfortunately, 2021 has proved to be the year that the merry-go-round stopped and Australia’s mining industry, and indeed its economy, reached a turning point. The era in which China could be trusted to buy an abundance of Australian dirt, and pay good money for it too, has come to an end – and probably for good. Three things have happened recently that dashed hopes that mining would drive the economic recovery.
China’s demand for iron, coal and copper ore and concentrates are now in a very sharp decline as a pending tidal wave of debt threatens to destroy three property developers – Evergrande, Sinic and Fantasia – and signal the end of China’s building boom. China’s infamous ghost cities are now starting to be demolished, releasing large quan ies of scrap iron and copper. The Financial Times estimates there is an abundance of idle property that could house 90 million people, though most likely it never will. This inventory of steel and copper will be recycled, as recycling is cheaper and more energy efficient than smelting from ores. This reduces the need for imported Australian coal.
China is in no great rush to buy iron ore. Or copper, aluminium, or lead. And if it was, it would rather not pay hard currency for it. Restocking of new steel supplies is not likely to happen this year, and I have no faith in analyst predictions that iron ore prices will jump again by the end of the year. By the time the scrap is used up, abundant supplies will be available from Central and West Africa.
In 2012, China imported about 70 per cent of all the world’s iron ore transported by sea, or about 680 million metric tons, in addition to its domestic production of about 280 million metric tons. About 60 per cent of the imported ore came from Australia. These days, the estimated total output from fully developed mines in West Africa’s Guinea and the Central African republics of Congo and Cameroon is between 400 million and 600 million tons annually – or almost the entire amount China was importing by sea in 2012.
Given that Cameroon and Congo see 70 percent of their financing requirements covered by the Chinese, new alliances were forged, and the Australians saw their licences revoked and stripped from them. It’s now all over, except for the shouting. Large lawsuits are incoming, seeking damages through international arbitration against the African governments for several Australian and British interests totalling some US$40 billion.
Evergrande misses another payment, Chinese property bonds tank
https://www.reuters.com/world/china/...es-2021-10-13/The IMF said on Tuesday that China has the ability to address the issues linked to Evergrande's indebtedness, but warned that an escalation of the situation could lead to the emergence of broader financial stress. read more
"It's a disastrous day," said Clarence Tam, fixed income portfolio manager at Avenue Asset Management in Hong Kong, highlighting how even some supposedly safer "investment grade" firms had now seen 20% wiped off their bonds.https://www.reuters.com/world/china/...ne-2021-10-11/Analysts at JPMorgan also highlighted how international investors were now demanding the highest ever premium to buy or hold 'junk'-rated Chinese debt.
There is now a whopping 1,200 basis point difference between the bank's closely-followed JACI China high yield index and a similar index of investment grade AA-rated local Chinese market bonds, known as "onshore" bonds.
"Evergrande's contagion risk is now spreading across other issuers and sectors," JPMorgan's analysts said.
Analysis of sector shows many many other debt payments are going to be missed. As I suspected.
I think the known risk of a catastrophic implosion has gone up.
The likelihood of the debt values for one, if not all, of the companies in that graph being higher than the graph shows is 1.00.
Factor in the off balance sheet systemic risk and it is no wonder that no one wants to loan to them.
China-US trade surges 35.4% to reach $543 billion in first nine months
China-US trade volume grew 35.4 percent from January to September in dollar terms from last year, Chinese customs statistics revealed on Wednesday.
Although the growth rate was slightly lower than the 36.6-percent-growth in the first eight months, bilateral trade volume still hit $543 billion from January to September. Experts expected this year’s bilateral trade will surpass the level before the China-US trade war in 2018 to reach $700 billion as trade relations between the two countries are getting back to normal.
The growth showed the intertwining character of the world's two largest economies and a strong recovery of the economies from the COVID-19, which will drive global economic recovery as two leading engines, Tian Yun, former vice director of the Beijing Economic Operation Association, told the Global Times on Wednesday.
They'll never go to war directly with us because they know there's no chance they can win.
This was always going to be the decade that globalization as we know it ended and destroyed the CCP economic model. The pandemic has only sped the process along.
It's going to be a bumpy ride, stay nimble.
^^^ who's the mechanical materialist now?
Don't forget the small detail: We both have nukes.
But that said, never underestimate hubris, or nationalism.
Don't sweat the small stuff
Commodity prices gonna plummet, especially anything used in construction, as already noted.
That may take the edge off the supply chain inflation.
Interesting times.
Another Chinese Developer Defaults in Wake of Evergrande Crisis
Chinese property developer Modern Land said Tuesday it had missed repaying principal and interest on a $250 million dollar bond, in yet another sign of the troubles encountered by the country’s overleveraged property sector
Modern Land (ticker 1107.HongKong) said in a filing with the Singapore Stock Exchange that “owing to unexpected liquidity issues” due to the macroeconomic and real estate environments and the Covid-19 pandemic, it didn’t meet the payment due Oct. 25
China...
( ultimate article hiden behind paywall) https://news.yahoo.com/m/d0646863-db...developer.html
China’s Plan to Manage Evergrande: Take It Apart, Slowly
Beijing is working on a controlled implosion of the real-estate giant, selling off some assets while limiting damage to home buyers and businesses
https://www.wsj.com/articles/evergra...rs-11636552507
I thought complete bail out or allowing uncontrolled collapse were the only options for governments. China seems to have come up with something new.
There are currently 1 users browsing this thread. (0 members and 1 guests)
Posting Permissions
