Australian (ASX) Stock Market Forum

China's Evergrande Group crisis

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greggles said:
This amounts to a fire sale of assets. $300 billion of liabilities is a lot to extinguish by paying with discounted property, especially in an overpriced property market. This is clearly the only option they have, but it's not going to be good for China's property market.



www.reuters.com

Evergrande begins repaying wealth product investors with property

Cash-strapped developer China Evergrande Group (3333.HK) has begun repaying investors in its wealth management products with real estate, a unit of its main Hengda Real Estate Group Co Ltd unit said.
www.reuters.com www.reuters.com
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Any significant Chinese developers in Australia who will need to sell assets quickly or not be able to follow through with builds I wonder? Probably concentrated in the commercial sector.
 

China’s Communist ‘Common Prosperity’ Campaign​


The “common prosperity” ideology is the realization of Chinese socialism imposed upon market-based, modern activity, which makes it especially hard for investors to interpret.

thediplomat.com

China’s Communist ‘Common Prosperity’ Campaign

The “common prosperity” ideology is the realization of Chinese socialism imposed upon market-based, modern activity, which makes it especially hard for investors to interpret.
thediplomat.com

... looking like a Lehman moment ??
 
It feels like we are at a tipping point. Real estate market and financial markets at highs throughout most of the western world, but it all feels like it's built on a foundation of sand and does not reflect reality. Is the Australian economy in better shape now than it was in 2019? Or is it all an illusion driven by COVID-19 induced irrationality?

The CCP is trying to prevent the Chinese economy from imploding by injecting capital into the banking system, but to what end? So more easy money can prop up the house of cards?

How much more money can governments around the world print before the chickens finally come home to roost? There are consequences for all things, and there is a price to pay for endless money printing and low interest rates.

Time to pay the piper?
 
greggles said:
It feels like we are at a tipping point. Real estate market and financial markets at highs throughout most of the western world, but it all feels like it's built on a foundation of sand and does not reflect reality. Is the Australian economy in better shape now than it was in 2019? Or is it all an illusion driven by COVID-19 induced irrationality?

The CCP is trying to prevent the Chinese economy from imploding by injecting capital into the banking system, but to what end? So more easy money can prop up the house of cards?

How much more money can governments around the world print before the chickens finally come home to roost? There are consequences for all things, and there is a price to pay for endless money printing and low interest rates.

Time to pay the piper?
Click to expand...
Here's evergrande today:

3567848487478947.jpg

I've been expecting something like this for a long time. Very concerned that this will be the domino that falls or the thing that upsets the apple cart or just pick your idiom.
 
over9k said:
I've been expecting something like this for a long time. Very concerned that this will be the domino that falls or the thing that upsets the apple cart or just pick your idiom.
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That is the question isn't it. Is it contained in China. Will they pull a rabbit out of the hat.
 
kennas said:
That is the question isn't it. Is it contained in China. Will they pull a rabbit out of the hat.
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Well, we first have to figure out just what rabbit could even be pulled from the hat before we start thinking about whether they'll actually be able to do it or not.

A lot of china's economic problems are long term headwinds. They've been cracking down on all kinds of stuff all year, casino's were just the latest of a long list a few days ago.

There's more to come, I just don't know what. According to the people I follow, they've been planning this for quite some time.
 
Does anyone think evergrande might be a good stock pick if it drops a bit more? Or am I crazy.

I'm looking at luckin coffee and we might see a similar "long term bounce" if it drops to ridiculous lows without going completely bust
 
This is certainly gaining traction in financial news...

Not sure what the long-term consequences will be though. I do remember when Luckin coffee (?sp) was ousted for fraud, several commentators were quick to highlight it was one of many Chinese companies defrauding investors with false financial records. In fact, these fears have been ever-present in China since as far as I can remember (at least post-2008) when each year doubt has been cast over the accuracy of China's GDP.

The reality has been that despite this concern, accurate or not, it has proven irrelevant as the CCP - to their credit - have managed to maintain stability throughout their economy and amongst their society.

I think the question here is whether the CCP can lose control, and if not, is it willing to cede control to market forces?

I would think the answer to both of those question is a firm 'no', and that's backed up by the actions of the CCP in regards to previous economic & health issues.
 
U.S Futures have been dropping precipitously all day, I'd say about 15ish basis points per hour.

It's now 15 mins before open and the s&p is down 1.6% premarket. Most of europe is more than 2% in the red, the HSI closed 3.3% down as normal chinese markets were closed today (can't remember why), and the vix is up 23%.
 
over9k said:
U.S Futures have been dropping precipitously all day, I'd say about 15ish basis points per hour.

It's now 15 mins before open and the s&p is down 1.6% premarket. Most of europe is more than 2% in the red, the HSI closed 3.3% down as normal chinese markets were closed today (can't remember why), and the vix is up 23%.
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A correction to the US market is well due. #1 victim of the pandemic. All problems being bandaided by money-printing. I'm surprised the S&P has boosted over their pre-pandemic levels so much (despite the money printing).

My guess is another 30% drop some time before the federal reserve panics and decides to annihilate the USD so investors are happy.
 
over9k said:
They've been cracking down on all kinds of stuff all year, casino's were just the latest of a long list a few days ago.

There's more to come, I just don't know what.
Click to expand...
Some of the things China's been cracking down on are really quite bizarre.

Casinos OK I can follow some logic being applied there. Not saying I agree but I can follow that there's some thinking behind it.

Playing video games is stretching it though, and pop music is getting a bit weird as a thing for a government to crack down on.

My thinking being that Evergrande is a visible symptom and a "poster boy" casualty but it's not the real story here. I suspect that a focus on economic analysis will turn out to be the wrong one overall even if it's right on some detail. :2twocents
 
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