Chinese megadeveloper falls off cliff

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Three Red Lines is turning into a bloodbath for China’s formerly largest developer, Evergrande. Yesterday:

  • 2025 bond fell to nearly half its value.
  • Equity is now less than 10% of enterprise value, down 12% in the past week.
  • It has emerged that the charming firm has been drawing down upon funds held in escrow from apartment buyers. Funds that are supposed to be retained for the build lest the developer gets in trouble.
  • The Chinese city of Shaoyang has halted sales at two of Evergrande’s residential projects in response.

The bloodbath is deep across the sector:

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.