Excellent poddy from Odd Lots on how and why the Evergrande crash happened and where Chinese property goes next:

Pantheon Economics with an excellent note: Chinese Property Sector Update: Keep a Cool Head on Easing 2021 was a terrible year for China’s property sector. Activity and price growth were well below the norms of recent years, as our first chart shows. Bad as the data look, the full-year performance was flattered by a reasonable

As commodities integral to Chinese construction keep skyrocketing, Chinese construction keeps crashing. This past week saw no material progress in developer credit spreads: Defaults and downgrades keep piling up: Fitch Ratings has downgraded China Aoyuan Group Ltd. to ‘Restricted Default’, while China Evergrande Group’s dollar bonds climbed the most in four months after signs of

The bear market property party is underway in China on its new, that is old, ponzi fix for developers to spend their client’s deposits on sustaining the unsustainable: Citigroup The potential easing will likely be executed at the local level on a case-by-case basis without a formal announcement, according to analysts including Griffin Chan The

Another attempted property fix is on the drawing board: Chinese regulators are considering lifting some restrictions on developers’ access to cash from presold properties tied up in escrow accounts, according to people with knowledge of the matter, a potentially major step toward easing the industry’s liquidity crunch. Regulators including the housing ministry and the banking

Did you say MOAR? Goldman on the PBoC: PBOC held a press conference this afternoon on the MLF and OMO policy rate cut on Monday (January 17). In general the tone from PBOC is very dovish and pro-growth. PBOC stated the need to expand the monetary policy toolkit, hinted at an LPR (Loan Prime Rate)

According to a useless AFR: I assume the subbies are joking. Yesterday’s stimulus was minor and, in context, dangerously so for those dependent upon Chinese property demand. The Chinese property market has a much larger problem than yesterday’s stimulus suggests. The liquidity crisis engulfing property developers is accelerating as it sucks in the good as

Chinese data for December is out and is a mess. The headline numbers were fine owing to resumptions in output after recent energy-related shutdowns. Q4 GDP was a respectable 1.6% to deliver a lousy 4% over the year: Growth internals were mixed for the month of December. Industrial production was decent year on year at

What is China’s endgame for its property shakeout? In short, the days of blistering home-price gains and debt-fueled building sprees by billionaire property tycoons are set to fade. They’ll be replaced by a much more staid market where authorities are quick to clamp down on speculative frenzies and development is dominated by state-run companies earning

Deutsche with the note: Omicron detected in Tianjin and Henan China’s first Omicron outbreak was detected in the city of Tianjin over the weekend. On the morning of Jan 8, two patients in Tianjin who actively sought medical treatment were confirmed as being infected with the Omicron variant. The local government immediately locked down certain

As much as markets would like it to be over, it isn’t. It’s getting worse. Developer junk spreads exploded yesterday to new records: It took in all of the usual suspects: But, more alarmingly, it is dragging in the largest and most well-regarded developers in the country. Country Garden is the largest in the market

Chinese credit was out overnight and enjoyed a soggy bounce with TSF up 2.37tr yuan and banks 1.13tr: The flow of loans was up 34% year on year: The stock of loans was up a little to 10.3% M2 climbed to 9%: Year to date Chinese credit was down 10% for 2021: Once again, the

What is a hard landing in China? Pick a number. Not long ago, 4% would have easily qualified. Goldman Sachs with the downgrade: The zero-Covid policy has been a pillar of China’s efforts to contain the coronavirus and keep domestic economic activity largely normal after the initial early-2020 national lockdown. We noted last week that

China is still trying to fix property without really trying: China will accelerate investment in key projects and boost domestic consumption to help stabilize economic growth amid renewed downward pressures, according to a cabinet meeting chaired by Premier Li Keqiang, China Central Television reported. The State Council urged faster implementation of 102 key projects along

A month later and little has changed. Chinese property is still royally stuffed. There has been a little easing for developer spreads: But sales remain awful: As are land sales, still down 70% year on year: More: Land sales measured in area in China’s 300 major cities reached 2.05 billion square meters in 2021 as

Goldman Sachs with the note: The number of Covid cases in China jumped in late December, with Shaanxi province the new epicenter. Although China has not yet reported any local infections linked to Omicron, markets have been increasingly concerned about the potential impact if the highly transmissible variant enters China and leads to further restrictions.

Goldman Sachs with the note: Bottom line: The NBS manufacturing PMI rose to 50.3 in December from 50.1 in November, likely due to restocking demand on the back of normalized raw material prices and policy easing. The output sub-index in the NBS manufacturing PMI survey fell in December, while the new orders sub-index increased. The

A great way to start the new year – a potential Chinese housing crash that could spillover to Australia? Evergrande has been put into a trading halt in Hong Kong yesterday – more from ABC: Troubled Chinese property giant Evergrande’s shares have been suspended from trading on the Hong Kong stock exchange. The company did

Goldman Sachs with the note: Bottom line: The PBOC held its Q4 monetary policy committee meeting on December 24th, with the meeting statement released on the evening of 25th December. The PBOC’s Q4 MPC meeting echoed Beijing’s stance at the recent Central Economic Working Conference (CEWC) – it emphasized policymakers would step up support to

Nomura with the note (Tu Ling has been better than most on this): Despite Beijing’s efforts to alleviate the funding crunch for developers, we expect developers and their construction partners to face some increasing financial challenges in the next couple of months. First, they may need to pay a total of RMB1.1trn in deferred wages

TS Lombard with the note: The end of coal shortages and the property slump mean that PPI is topping out, while Covid zero tolerance is capping CPI gains. Covid capex could create excess supply and export price disinflation. Benign domestic inflation backdrop allows the PBoC to continue easing; a 50bps RRR reduction and targeted rate

Welcome to the new post-iron ore Chinese stimulus pattern. There’ll be some stimulus around infrastructure and property, but it will be much smaller and less iron ore intensive than previously. Morgan Stanley with the note: Over the years, China has experienced a number of mini-cycles. This year brought another iteration – the economy started the

Goldman Sachs with the note: Covid restrictions weighed on consumption and services in November: Local outbreaks have become more frequent in China in recent months. November data show clear evidence of Covid-related restrictions weighing on consumer activity. Consumer services and small businesses are most affected and remain 10%-15% below their pre-Covid trends. Labor markets have

Goldman with the note: Bottom line: The National Bureau of Statistics’ 70-city housing price data suggests the average property price in the primary market edged down further from a month ago in November after seasonal adjustments. Housing prices in tier 1 and tier 2 cities rose at a slower pace while prices in lower tier

Pantheon Macroeconomics with the note: Early Chinese data point to a stabilisation—at low levels— of economic activity. Infrastructure investment likely rose in November, partially offsetting the property slowdown. Prepare for a harsher crackdown on the private sector in 2022, and more infrastructure spending. Slow and Steady in November as Policymakers Double Down A November stabilisation