Australian (ASX) Stock Market Forum

China's Evergrande Group crisis

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Knobby22 said:
Very good article in the Age today, which I get delivered, from their North East Asian correspondent Eryk Bagshaw. Worth reading but I am not going to provide a link.

The basic conclusion is that the Chinese Government will use their significant powers of persuasion over smaller firms, investors and homeowners to accept a compromise out of a sense of national duty.

You may say well that is typical but I would argue the USA Chapter 13 bankruptcy law is similar where creditors are forced to take a haircut while the firm is allowed to continue.
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https://www.theage.com.au/world/asia/what-caused-the-evergrande-crisis-20210922-p58tru.html
for anyone interested
 
there is probably something going on

i suspect there are some bailouts happening in the West , although most of those toxic CDOs from the GFC disappeared ( probably via shady book-work

and let's face it the Basel III stress tests outside of Australia have been a joke ( and given some of our bankers' record in Australia might have been window dressing as well )
 
the main problem in the West will be a reminder of how fragile the construction industry can be , the US has timber price spikes and supply disruptions

and the Melbourne ( and i assume Victoria in general ) situation in Australia , will have buyers and financiers remember the bad times in the past ,

opportunity for the brave , but would you jump in
 
US timber prices have steadily fallen in the recent months after peaking at ridiculous levels in above US$1600 in may.

"Sell in may and go away" commodity version ©️ ?

1632446726834.png

Anyway the hysteria over US real estate prices due to timber shortages have also subsided as a result.

I remember commentators and news articles at the time trying so hard to run scare mongering tactics fueling the US Real Estate bubble predicting inflation was going to run rampant and supply disruptions was going to cause Lumber to double, triple, quadruple and so forth.

In the case of lumber I guess FED'ers were right when they didn't raise interest rates and said they believed the inflation that was seen was transitory or temporary from their analysis. I am not trying to predict inflation in general which is made up of so many factors including commodity price increases, just looking at lumber prices in isolation in this case.
 
aus_trader said:
US timber prices have steadily fallen in the recent months after peaking at ridiculous levels in above US$1600 in may.

"Sell in may and go away" commodity version ©️ ?

View attachment 130670

Anyway the hysteria over US real estate prices due to timber shortages have also subsided as a result.

I remember commentators and news articles at the time trying so hard to run scare mongering tactics fueling the US Real Estate bubble predicting inflation was going to run rampant and supply disruptions was going to cause Lumber to double, triple, quadruple and so forth.

In the case of lumber I guess FED'ers were right when they didn't raise interest rates and said they believed the inflation that was seen was transitory or temporary from their analysis. I am not trying to predict inflation in general which is made up of so many factors including commodity price increases, just looking at lumber prices in isolation in this case.
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What was the reason for the tinder shortage, actually? Was it the pandemic?
 
e_abrams said:
What was the reason for the tinder shortage, actually? Was it the pandemic?
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Not a shortage as such: trees are still there,do not go wasted if left in forest for an extra year but disruption of the supply chain due to pandemic measures.. remember,the virus did not kill tress, stop trucks and timber fellers, the lockdown and stop work mandate did.
Add to this the shipping containers pricing going exponential and movement of high volume low value items..like grain, timbers, raw materials is last in priority list for cargo load..
Timber is not a long term worry, grain more serious..as it rots, as are perishable goods..do not expect to see aussie mangoes in China this year...
My view and how even raw product sich as Ag goods are affected
 
All part of the Reset with food shortages on the line if you have a bit of conspiracy..or unfortunate well matched coincidences?
 
e_abrams said:
What was the reason for the tinder shortage, actually? Was it the pandemic?
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@qldfrog has given a great explanation, better than I could.

So in summary it was the supply chain disruption that caused the lumbar prices to skyrocket temporarily. It was a shorter term price anomaly, however other supply chain disruptions will take longer to play out... One I can think of the top of my head is the semiconductor chip supply chain disruption.
 
from memory predominantly forest fires , which SOME were allegedly started by activists , but a secondary factor was mills stock-piling ( allegedly hoarding ) for selected customers but other factors were involved , but without the fires ( supply disruptions ) possibly nothing spectacular , just another hindrance
 
e_abrams said:
What was the reason for the tinder shortage
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Tinder shortage? :laugh:

That's a rather different sort of problem.....

Seriously, there's so much that seems to be going on in China at present that I think the one certainty to all this is that any analysis will be missing some bits.

Banning cryptocurrencies, video games, Evergrande, power shortages, the various diplomatic issues.....

My point there isn't a political one as such, just noting that there seems to be rather a lot going on all at once which leads me to assume there's probably quite a bit more to come that isn't yet apparent. "Expect surprises".:2twocents
 
e_abrams said:
I meant "tiMber shortage". Ah, what a typo, sorry about that. ?

That said, considering the disproportionate amount of men to women in their population currenty, it turns out the typo was spot on anyway. ?
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Thanksfully, numbers self balance due to Grinder
Would be interesting to know the covid economic effect on these types of apps with restrictions..but not affected yet by Evergrande
 
Growth in China in the early 2000s was unlike anything in economic history. As many as 250 million people moved from subsistence farming to working in cities with far better lifestyles in a few decades. But they needed housing:

From a 2019 article about the superblock construction mania, found in https://radiichina.com/building-china-rise-...the-superblock/

Building China; Rise of the Superblock

Chinese officials in the 1990s were under pressure to expand the housing supply, and fast. The most expedient way of accomplishing this was to parcel out enormous plots of land to private developers, who quickly filled them with 30 story residential towers. The city planning authorities, meanwhile, obligingly built eight lane highways between the blocks to service inevitable car traffic.
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One reason for this… is the symbolic importance of cars and highways. Chinese officials obsessed with projecting a modern, world class facade would of course seek to emulate the American city model, no matter how badly that model has been discredited. For ordinary Chinese people, too, car ownership was a crucial indicator of socioeconomic status.
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But an even more important reason behind the continued insistence on superblock planning is the reliance of Chinese city governments on land lease revenue. Since the tax sharing reforms of 1994, cities have been obliged to fork over an enormous percentage of their tax revenue to the central government. In order to generate enough revenue to cover social services and other costs, cities have come to rely heavily on China's land lease mechanism that allows the city to rent parcels of land to private developers for a period of 70 years.
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Superblock planning therefore was irresistible to Chinese officials, who could quickly expand the housing supply and generate a massive amount of tax revenue in the process. Although it is changing, it is still the case that Chinese cities generate an astonishing percentage of their revenue from land leases ... more than half by most estimates.
Click to expand...
 

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