Australian (ASX) Stock Market Forum

China's Evergrande Group crisis

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The market has know this was going down for some time I really don't understand the overreaction.
CCP will bail then out.
All looks like a lot of market manipulation from my POV US side.
 
remember the West is addicted to low interest rates and QE , God forbid this got labeled as Taper Tantrum 2 just 3 years after the last one
 
If the debt---any debt for a sovereign country is internal and not external as in owing to anyone other than themselves.

Then they can print or click away funds required and debt. That's what is happening now in sovereign countries to finance
the Costs of COVID. The only time it is a killer is when the debt is owed to externals. Why do you think the UK wanted out
of the EU. They didn't want a debt to the EU. You cant do that as a Company or a private individual but if your print your
own money---- So who's really at risk? There wont be any bailing! No Need.
 
There would have to be some liabilities owing to the West that I am pretty sure CCP will pay up as they can not do without USD just yet.
The internal debt meh!
 
tech/a said:
If the debt---any debt for a sovereign country is internal and not external as in owing to anyone other than themselves.

Then they can print or click away funds required and debt. That's what is happening now in sovereign countries to finance
the Costs of COVID. The only time it is a killer is when the debt is owed to externals. Why do you think the UK wanted out
of the EU. They didn't want a debt to the EU. You cant do that as a Company or a private individual but if your print your
own money---- So who's really at risk? There wont be any bailing! No Need.
Click to expand...

I think that is not fully accurate and IMV too simplistic an analysis.

There are substantial external debt holders. The simple printing of money by the Chinese government to bail out Evergrande isn't on the cards. They will certainly attempt to control the collapse. From our POV there will almost certainly be a larg contraction in Chinas economy as a consequence.

www.reuters.com

Explainer: How China Evergrande's debt troubles pose a systemic risk

China Evergrande Group (3333.HK) has raised fresh warnings of default risks amid late payments to wealth management and trust products.
www.reuters.com www.reuters.com
 
tech/a said:
If the debt---any debt for a sovereign country is internal and not external as in owing to anyone other than themselves.

Then they can print or click away funds required and debt. That's what is happening now in sovereign countries to finance
the Costs of COVID. The only time it is a killer is when the debt is owed to externals. Why do you think the UK wanted out
of the EU. They didn't want a debt to the EU. You cant do that as a Company or a private individual but if your print your
own money---- So who's really at risk? There wont be any bailing! No Need.
Click to expand...
Yes China itself is at no risk, it is more the swiss banks, etc which own these Evergrande bonds which are at risk, and countries with overall huge debt to.. China and huge trade deficits:
Europe italy francethe whole block
US at risk if USD loses its refuge status.maybe not yet
And all the minnows
Turkey here, Argentina there etc
For Australia, just a proper economic crisis i think due to no more china purchase of coal, iron, gas..and so back to agriculture and expresso economy.
The winners? Russia, India, China...
I obviously have no crystal ball so know nothing....
 
SOME Evergrande debt is denominated in $US ( i don't see any mention of debt in Euros )

i suspect China will handle the internal part ( but might not be gentle about it )

the question is do we know how much foreign debt ( and derivatives ) is involved here by the time you get to CDS you might be talking a trillion dollars worth rattling around in hedge funds and pension funds

it was the derivatives held by AIG that nearly out the global economy in the GFC ( few of the big banks would have had any 'insurance ' , if AIG was let fail )
 
bsnews said:
There would have to be some liabilities owing to the West that I am pretty sure CCP will pay up as they can not do without USD just yet.
The internal debt meh!
Click to expand...
Why would ccp pay the bond to UBS or Blackrock? No way.it is a gigantic FU coming...
 
qldfrog said:
Why would ccp pay the bond to UBS or Blackrock? No way.it is a gigantic FU coming...
Click to expand...
if they and their rivals are exposed expect a huge amount of derivatives as well

and yes i expect China to raise an index finger to those insatiable vampires

i assume most of their risk is buried in their clients accounts
 
tech/a said:
If the debt---any debt for a sovereign country is internal and not external as in owing to anyone other than themselves.

Then they can print or click away funds required and debt. That's what is happening now in sovereign countries to finance
the Costs of COVID. The only time it is a killer is when the debt is owed to externals. Why do you think the UK wanted out
of the EU. They didn't want a debt to the EU. You cant do that as a Company or a private individual but if your print your
own money---- So who's really at risk? There wont be any bailing! No Need.
Click to expand...
Spot on Duck and exactly the reason the 1987 crash affected Australia much more than the GFC.
 
divs4ever said:
SOME Evergrande debt is denominated in $US ( i don't see any mention of debt in Euros )

i suspect China will handle the internal part ( but might not be gentle about it )

the question is do we know how much foreign debt ( and derivatives ) is involved here by the time you get to CDS you might be talking a trillion dollars worth rattling around in hedge funds and pension funds

it was the derivatives held by AIG that nearly out the global economy in the GFC ( few of the big banks would have had any 'insurance ' , if AIG was let fail )
Click to expand...
IMV this is the critical issue with debt exposure. As they say " you only see who's swimming naked when the tide goes out."
 
It would seem that many in Aus think today is a buy the dip moment....?
I hope that works out for them... however I'm playing it as a sucker rally, rightly or wrongly. (I have bought some AXE and OOO though ?)

I think the Fed is due for an announcement about tapering on Wed.
Emergency stimulus payments to US people's (unemployed etc) ended 2 weeks ago, and well guess what? The masses aren't flooding the job markets yet...
interesting times.
 
sptrawler said:
Spot on Duck and exactly the reason the 1987 crash affected Australia much more than the GFC.
Click to expand...
So is this China Property Developer worries more like a GFC or 1987 or some news and media BS to scare/panic the markets (i.e. storm in a teacup) that wouldn't affect Australia ?
 
frugal.rock said:
It would seem that many in Aus think today is a buy the dip moment....?
I hope that works out for them... however I'm playing it as a sucker rally, rightly or wrongly. (I have bought some AXE and OOO though ?)

I think the Fed is due for an announcement about tapering on Wed.
Emergency stimulus payments to US people's (unemployed etc) ended 2 weeks ago, and well guess what? The masses aren't flooding the job markets yet...
interesting times.
Click to expand...

The masses are starting to flood the streets, aussie construction industry is grinding to a halt, doesn't look like a good times moment
 
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