Author Topic: Is there a Global Crisis on its way?  (Read 1315 times)

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Offline eyephone

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Is there a Global Crisis on its way?
« on: October 07, 2021, 12:18:52 PM »
CNBC: Chinese developer misses bond payment as stress spreads beyond Evergrande crisis

On the heels of Evergrande's debt crisis, there are increasing signs of stress in China's property market after one developer failed to make a bond payment on Tuesday.

Ratings agencies have downgraded Chinese developers Fantasia Holdings and Sinic Holdings over risks from their strained cash flow situations.

https://www.cnbc.com/2021/10/05/china-property-default-risk-for-fantasia-sinic-amid-evergrande-crisis.html

Reminds me of the previous crisis.


The Guardian News: China’s factory activity in shock slowdown as energy crisis hits home

China’s factory activity has shrunk unexpectedly amid curbs on electricity use and rising prices for commodities and parts, raising more concerns about the state of the world’s second biggest economy.

https://www.theguardian.com/world/2021/sep/30/chinas-factory-activity-in-shock-slowdown-as-energy-crisis-hits-home


Offline morekaos

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Re: Is there a Global Crisis on its way?
« Reply #1 on: October 07, 2021, 02:21:20 PM »
Just like Japan in the 90's...same path.

Offline sleepy5136

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Re: Is there a Global Crisis on its way?
« Reply #2 on: October 07, 2021, 02:43:36 PM »
I would only be concerned if foreign national banks have heavy exposure to Chinese RE.

Offline eyephone

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Re: Is there a Global Crisis on its way?
« Reply #3 on: October 07, 2021, 04:06:55 PM »
I would only be concerned if foreign national banks have heavy exposure to Chinese RE.

Reuters News 9/21/21: BlackRock, HSBC among largest buyers of Evergrande debt: Morningstar

Fund giant BlackRock and investment banks HSBC and UBS were among the largest buyers of the debt of embattled Chinese real estate developer Evergrande Inc, Morningstar data shows.

BlackRock added 31.3 million notes of Evergrande's debt between January and August 2021, pushing its stake in the company to 1% of the assets in its $1.7 billion Asian High Yield Bond Fund, according to Morningstar.

HSBC increased its positions in the company by 40% through July, according to Morningstar. UBS increased its position by 25% through May, the latest date available in the fund tracker's database.

None of the companies responded to requests to comment for this story.

At the same time, other large fund firms such as Fidelity, Pimco, and Allianz cut their positions in the company by up to 47% between January and July, Morningstar said.

Growing fears that Evergrande will default on its $305 billion in liabilities has rattled global markets this week as investors worry that a downturn in the Chinese property market will spill over into the global economy.

https://www.reuters.com/business/finance/blackrock-hsbc-among-largest-buyers-evergrande-debt-morningstar-2021-09-21/






Offline sleepy5136

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Re: Is there a Global Crisis on its way?
« Reply #4 on: October 07, 2021, 11:00:15 PM »
Lol MeetKevin had a video explicitly detailing BlackRock and HSBC’s exposure. It’s tiny. You can go find that video. Initially he even thought it was a concern until he dug into the details.

Video: . He starts talking about it at the 12min mark

Offline eyephone

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Re: Is there a Global Crisis on its way?
« Reply #5 on: October 07, 2021, 11:27:01 PM »
Axios News: Energy crises in Europe and China are spilling into economic forecasts, supply chains and beyond.

Driving the news: Europe has for weeks been facing sky-high natural gas and power prices, while China — the world's second-largest economy — is facing electricity shortages that are hobbling factories.

https://www.axios.com/energy-crises-europe-china-gas-power-electricity-aa877c09-b0f3-4057-af10-6ccebdeaf654.html

https://www.reuters.com/business/energy/global-energy-shortage-or-coincidence-regional-crises-2021-09-29/

There might be a speculative play. (Not investment advice)

Offline eyephone

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Re: Is there a Global Crisis on its way?
« Reply #6 on: October 08, 2021, 11:58:11 AM »
Lol MeetKevin had a video explicitly detailing BlackRock and HSBC’s exposure. It’s tiny. You can go find that video. Initially he even thought it was a concern until he dug into the details.

Video: . He starts talking about it at the 12min mark

It does not talk about the tightening credit market in China. According to Bloomberg, China’s $12 trillion domestic credit market has shown signs of strain. (Reported by Bloomberg 10/7/21)

Offline sleepy5136

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Re: Is there a Global Crisis on its way?
« Reply #7 on: October 13, 2021, 12:48:57 PM »
BlackRock reported today. Stock up ~4% after ER. Didn't dig through the earnings but hearing good numbers. So that crosses out a big bank being impacted by Evergrande. Unless they are hiding this crap and not disclosing which I believe is illegal to begin with.

Offline eyephone

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Re: Is there a Global Crisis on its way?
« Reply #8 on: October 13, 2021, 01:32:41 PM »
BlackRock reported today. Stock up ~4% after ER. Didn't dig through the earnings but hearing good numbers. So that crosses out a big bank being impacted by Evergrande. Unless they are hiding this crap and not disclosing which I believe is illegal to begin with.

WSJ: BlackRock Profit Rose 23% in 3rd Quarter, Helped by Actively Managed Funds

Money managers’ assets and profits ballooned in the past year with the Federal Reserve pumping money into the economy and the stock market soaring.

Now investors have become more bearish on growing concerns about higher inflation, slowing U.S. economic growth, global energy shortages, and contagion from debt-laden property developer China Evergrande Group. An emerging markets’ selloff and lackluster S&P 500 returns in the latest quarter damped BlackRock’s asset growth.

In the last quarter, BlackRock raised about $1 billion for the first-ever mutual fund solely run by a foreign company for Chinese individuals. It is forging ahead with plans to grow in China even as U.S.-China tensions escalate.

As investors wait for a resolution to Evergrande’s debt troubles, Mr. Fink said the situation will likely result in “some losers,” and any policies by China to reduce its economy’s reliance on real estate could slow the country’s growth. BlackRock is among managers that hold Evergrande debt in funds.

https://www.wsj.com/articles/blackrock-profit-rose-23-in-third-quarter-11634122455


Offline sleepy5136

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Re: Is there a Global Crisis on its way?
« Reply #9 on: October 13, 2021, 05:23:04 PM »
BlackRock has exposure to Evergrande, but it's super small.

Offline morekaos

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Re: Is there a Global Crisis on its way?
« Reply #10 on: October 19, 2021, 09:16:56 AM »
This goes deeper than just Evergrande and they are trying to ignore it...

Defaults loom over more property developers as China reassures investors on Evergrande

All eyes will be on Chinese real estate developer Sinic Holdings, which warned last week it’s not likely to repay offshore bonds worth $250 million due on Monday.
On Friday, another developer, China Properties Group, said it had defaulted on $226 million worth of notes.
Ratings agencies issued a fresh round of downgrades on Chinese property firms last week.
It comes as investors remain in limbo as uncertainty over the fate of heavily indebted Evergrande looms.

1. China Aoyuan
On Friday evening, S&P Global Ratings downgraded China Aoyuan, one of the bigger developers in China’s Guangdong province which focuses on the country’s Greater Bay area. The ratings agency pointed to its high debt, and said the firm’s move to reduce debt will slow over the next year.

It also flagged Aoyuan’s “considerable” bond maturities due in 2022, which will put further pressure on the property firm.

One thing we can be sure of is that the property sector is struggling.
Julian Evans-Pritchard
SENIOR CHINA ECONOMIST, CAPITAL ECONOMICS
“The company’s reduced visibility on revenue growth and continued margin pressure will hinder deleveraging efforts. Weakening cash generation will also pressure Aoyuan’s liquidity as it faces sizable maturities in 2022, despite our expectation that the company can still sort out the repayment under a tighter situation,” S&P said.

2. Modern Land
Fitch also downgraded Modern Land on Friday, citing the developer’s move to delay for three months a repayment on a $250 million offshore bond.

3. Greenland Holding
Preceding Friday’s downgrades, S&P on Thursday downgraded Greenland Holding — one of the bigger real estate developers which has prestigious properties in cities such as New York, London and Sydney. It also cited its “impaired” funding access, which will limit its ability to weather the downturn in the property industry. Fitch said it expects the firm’s ability to generate cash to slow.

“Greenland’s bond prices have deteriorated sharply again following wider investor concerns over the sector,” Fitch wrote. “A prolonged weakness in bond prices may hit the confidence of the company’s borrowers, suppliers, and purchasers.”

https://www.cnbc.com/2021/10/18/china-property-defaults-risks-for-other-developers-pboc-on-evergrande.html

Offline Compressed-Village

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Re: Is there a Global Crisis on its way?
« Reply #11 on: October 19, 2021, 10:06:16 AM »
This is first of the dominos. It won’t be fast and furious, but nonetheless, it will fall one after another. Ever grande is not just housing developers, they are in the EV market too, among other (was) high flying sectors in China.

Offline sleepy5136

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Re: Is there a Global Crisis on its way?
« Reply #12 on: October 19, 2021, 10:13:34 AM »
I think we also need to understand the exposures that these companies have to other international banks. Thus far, it's only BlackRock that I would be concerned about but their exposure is very small compared to their other positions. Throwing headlines out there when the next crash or global crisis always catches eyeballs. But we need to have data/facts to prove that this is an actual concern. If any international bank had a big exposure to Evergrande, I'm so sure that it would have been disclosed by now.

TBH not a lot of international banks invest in China to begin with and even if they do, it's super tiny exposure. I mean, how many of you have Chinese investments? And if so, how much %? We need to put things into perspective instead of simply throwing out articles that shows no facts as to how it could potentially spill over to another global economy like Europe or US.

Online nosuchreality

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Re: Is there a Global Crisis on its way?
« Reply #13 on: October 19, 2021, 10:21:39 AM »
Meh, if we can patch up Long Term Capital, Goldman, BofA, Wells, Merrill, United, GM,  China can patch up theirs too.

It’s a giant house of cards of paper money of Wimpy hamburger IOUs for Next Tuesday.

As long as the wage slaves keep grinding it out every day for a shiny new cell phone, a fast food lunch and a place to sleep, it’ll march.

Seems like the noise is a lot of wage slaves are checking out.

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Offline eyephone

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Re: Is there a Global Crisis on its way?
« Reply #14 on: October 19, 2021, 10:33:24 AM »
Business Insider Article:

Key points of the article

A bankruptcy could be disastrous for Chinese homeowners, who hold 70% of their wealth in real estate.

It has 1.6 million undelivered apartments and is more than $300 billion in debt, making it the most indebted company in the world.

How big is China's real estate market?
China's real-estate sector is huge. According to Goldman Sachs Group Inc., the total value of the market hit $52 trillion in 2019 — twice the size of the US residential housing market, The Wall Street Journal reported. The sector accounts for 29% of China's gross domestic product (GDP). And its cities are growing rapidly: In 2019, China recorded a 60% urbanization rate.

https://www.businessinsider.com/china-housing-market-explainer-cost-debt-wealth-evergrande-impact-2021-9

The main problem is the missed bond payments and unfinished units.

 

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