China Economy

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Get set for a falling yuan

TS Lombard with the note: For the PBoC, growth and financial stability concerns trump inflation and worries about monetary policy divergence. The bank’s recently released Q3 monetary policy report indicates a dovish shift and confirms our expectations of sustained policy support for the economy, particularly for the property sector. A 50 bps RRR cut is

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China’s Evergrande shakeout still in full swing

China’s Evergrande shakeout is not getting better. Dollar bond spreads for developers did narrow slightly last week but remain at paralysis levels: That said, incremental easing is still underway at the ground level: It needs to be. Property sales are still terrible: Land sales remain apocalyptic with developer balance sheets still in outright survival mode:

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Chinese stimulus still small and targeted

You wouldn’t know it from the reaction in the iron ore market but the Chinese stimulus is still small and targeted. At the FT: Chinese regulators have eased pressure on property developers by loosening credit controls and allowing more bond issuance in recent weeks in an effort to prevent the sector from collapsing. But analysts

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China “paradigm shift to much lower growth”

Scuttlebutt is the new currency in the Chinese property adjustment: Speculation circulated after the mid-day break about lenders being asked to increase developer loans, driving traders to take the opportunity to bargain hunt despite skepticism. A Bloomberg Intelligence gauge of Chinese developers jumped 3.7%. The gains offset a selloff of tech shares as Alibaba joined

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Evergrande ends China’s growth “catch-up”

The news on Evergrande and friends is still troubled today as potential rescues vie with contagion: Chinese property stocks fell as Evergrande agreed to dispose of a Hong Kong-listed business for the first time since its liquidity crisis began, while HengTen rallied. The deal, along with Country Garden Services Holdings Co.’s second share placement in

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China’s Evergrande save disappoints

China property developer save doesn’t look like the end of the property adjustment at all: China plans to let property companies resume issuance of asset-backed securities, ending a three-month market freeze as authorities move to insulate higher-rated developers from an industrywide funding crunch. Financial regulators recently told Chinese exchanges that “high quality” developers can apply

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Chinese “stimulus hopes overblown”

Pantheon Economics with the not: Chinese Industry Avoids Calamity, but Q4 Looks Set for Weakness China’s economy is still in the doldrums, but a faint breeze is tugging at the sail. The horizon remains stormy and dark, however, and the currents are treacherous. Fixed asset investment slowed further in October, to 6.1% year-over-year, from 7.3%,

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China’s Evergrande ponzi-scheme robs Peter to pay Paul

By looking at last week’s market action you might think that the Evergrande developer crisis is over. Developer spreads ripped in and equities soared: Goldman’s policy monitor has eased but it is marginal: The truth of it is more complex: Some Chinese property developers recently announced plans to issue debts, fuelling market expectations for easing

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Evergrande fixed! Buy all the developer things…

Evergrande is fixed! It’s been the biggest two-day rally in Chinese developer stocks that anybody can remember: So, are houses for speculating on, not living in again? No. Shares and bonds gained for a second day after reports that regulators may adjust rules to allow real estate firms to sell debt in the domestic interbank

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China moves to save Evergrande and friends

Chinese developer funding markets are in turmoil: Bad developers are doomed: More importantly, so are good developers: This is why we are seeing increasingly intensive policy maneuvers: The Securities Times said the easing will center on the interbank bond market, which has seen issuance from developers fall in the past year. While the report didn’t

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Chinese inflation booms, don’t worry about it

Mwahaha. Chinese inflation is out and producer prices have overshot impressively: However, the rises remain very narrow and focused on commodities which are now crashing so October may well be the peak: Price rises crept in the CPI: But are even more narrow, focussed on travel: Contrary to what you’ll read elsewhere, there is nothing

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Evergrande crash increasingly out of control

More bad news today for China’s hapless attempt to peacefully deflate the greatest property bubble in history. Another deadline is upon us and the pipeline is impressive: Investors are waiting to see if the embattled developer makes coupon payments totaling $148.1 million for three dollar bonds before the end of 30-day grace periods Wednesday. Evergrande

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Goldman buys dead debt of Evergrande’s mates

Goldman Sachs has not had a good Chinese crisis. It has significantly underestimated the scale, breadth and policy determination of China’s property adjustment. It has recommended both buying and selling copper. As iron ore crashed earlier this year, it upgraded its forecast price to over double its current value. As Chinese property swooned, it declared

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Evergrande crashes everything Chinese property

You probably have to have lived through a similar episode to know what is coming in China. It is the same process that we saw in the US property market pre-GFC: a toxic feedback loop of falling asset prices, deleveraging balance sheets, ratings downgrades and default. In China, it is on the supply side of

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A multitiude of crashing Evergrandes the new “normal”

The market celebrated the end of the Chinese property adjustment yesterday: Property shares in China gained after the Shanghai Securities Journal cited an unidentified government agency saying that lending to the real estate sector “basically recovered to normal levels” in October. Here’s what “normal” looks like: Chinese property developers’ bond financing continued declining in October and they

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Another Evergrande as “winter has come” to Chinese property

Today’s new Evergrande is Ronshine: Fitch Ratings has downgraded China-based homebuilder Ronshine China Holdings Limited’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B’, from ‘B+’. The Outlook is Negative. Fitch has also downgraded the senior unsecured rating and the rating on Ronshine’s outstanding US dollar senior notes’ to ‘B’, from ‘B+’, with Recovery Ratings remaining

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China’s property crash goes from bad to worse

Chinese real estate dollar bonds continue to freeze solid. Yesterday we approached another record spread: Deal flow has all but ceased: The news was poor as well: China’s dollar high-yield bonds are falling for an eighth-straight day Monday after tumbling nearly 9 cents on the dollar in October, closing out the worst two-month slide in a

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China PMIs weaken some more

Blow me over with a feather. The Chinese economy is sagging. First, manufacturing: In terms of enterprise scale, the PMI of large enterprises was 50.3% , a slight decrease of 0.1 percentage point from the previous month , but still above the threshold; the PMI of medium-sized enterprises was 48.6% , a decrease of 1.1 percentage points from the previous month , which was below the threshold; small businesses The PMI was 47.5% , the same as last month,

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Chinese property hard landing broadens to infrastructure

There’s a new Evergrande every day now. Friday’s was Yango: Fitch Ratings has downgraded China-based property developer Yango Group Co., Ltd.’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ from ‘B+’. The Outlook is Negative. Fitch has also downgraded Yango’s senior unsecured rating to ‘B-‘ from ‘B+’ and maintained the Recovery Rating at ‘RR4’. Fitch

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Beijing frantic as Chinese property bust deepens

S&P is really warming into its job of being a pro-cyclical agent of destruction: A third of China’s property developers could see their liquidity “acutely strained” in the worst case scenario as weaker sentiment and new regulations weigh on their funding sources, said S&P Global Ratings. More than half of its rated portfolio of Chinese developers are

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Chinese property crash triggers more easing

Good and bad news today for the Chinese property crash today. It has been a few better days for developer spreads and equity as the PBoC gets busy with its jawbone. Wider financial conditions remain tight: But the demand side of property is seeing easing: As the construction market outright crashes: But hopes that the

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Goldman slashes Chinese growth, nowhere near enough

Goldman with the note: The weak Q3 growth was driven by a number of factors – Covid outbreaks and chip shortages that the government has less control over on the one hand, and property tightening and power cuts that are mostly policy-driven on the other. The September activity data show evidence on the combination of

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Exclusive: Anne Stevenson-Yang on China’s hard landing and beyond

Via our goods friends at Gordon Johnson Research: Can China Rescue Its Economy from Property? No. The current downturn is driven by demand, not supply. ·         What’s happening now? China’s economy took a sharp left turn in July. Construction starts down 17% YoY in September, following a 14.6% decline in August. Crude steel production down 21.5% September.

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No end in sight to Chinese property rout

There’s plenty of talk about the end of the Chinese property crash. There’s plenty of hope for the end. There’s plenty of selling of the end. What is missing is the end. The crash rolls on imperturbed by the madness of men. Actual sales of apartments remain very weak at around 2014/15 levels: Another key