China’s hard landing has arrived. Here is some more texture from yesterday’s poor figures. First, Nordea: China’s GDP growth slowed more than expected to 0.2% q/q and 4.9% y/y in July-September. Despite the weak numbers in Q3, the base effect implied that China’s GDP was up by 9.8% y/y in the first nine months of
Chinese September monthly data is out and missed bigly. Sept QTR barely grew at 0.2% and YTD is down to a 4.9%: Under the bonnet and monthly data is noteworthy for two reasons. Firstly, growth has stalled out as it is hit by the combined property and power shocks. YoY industrial production is a lousy
Courtesy of the Insitute for New Economic Thinking. I 100% agree with Jim Chanos. Renowned short-seller Jim Chanos, founder of Kynikos Associates, is what you might call the “ever-bear” of China. For more than a decade, he has warned that the country was building a real estate-driven economy on a feeble house of cards. He spoke to
The media was swept up in old news late Friday when we saw this gem drop: Chinese central bank on Friday tried to sooth market concerns over debt woes at embattled China Evergrande Group and other property developers, saying the spillover effect for the banking system is controllable. Financial institutions’ risk appetite for the real
The Chinese property crash is getting worse at a spectacular clip: Rating agency S&P Global delivered fresh downgrades to two of the sector’s bigger firms, Greenland Holdings – which has built some of the world’s tallest residential towers – and E-house, and warned it could cut their ratings further. The $5 trillion property sector accounts
China released September credit last night and needless to say it undershot, “surprising” apparently everybody but MB. Total new yuan loans were 3.03tr yuan with banks making up 1.66tr of that: Year on year growth fell 16% and the 3MMA dropped further to -23%: M2 was stable at 8.3% The rolling annual mountain continues to
We need a new website to start tracking this. I suggest the URL www.fuckeddeveloper.com. It’ll be a smash hit for the next few years: Moody’s Investors Service, Fitch Ratings and S&P Global Ratings have cut Chinese builders’ ratings a combined 91 times through Sept. 30, triple the number of this year’s upgrades. That’s already a
The major point is Chinese property is much larger in GDP terms than anywhere else and you need to add negative wealth effects as well if it deflates. Goldman: China’s property sector has been in focus given intense regulatory pressure on developers’ leverage and banks’ mortgage exposure, and consequent contraction in sales and construction activity.
There’s not much point repeating a couple of good posts from ZH on the China property situation given they capture my thoughts so here they are. First up, the Chinese property crash is getting worse fast: Having already suffered the fastest drop on record, Chinese junk bond markets – where property developer issuers dominate –
There’s no stopping it. First up, September sales were a write-off: China’s new home sales during the week-long National Day holiday declined significantly from a year earlier, led by sharp drops in lower-tier cities, as the housing market in the world’s second largest economy continues to cool down. New home sales measured by floor space
The Chinese property developer Ice Age intensifies: China Evergrande Group’s dollar bonds fell after people familiar with the matter said some creditors had yet to receive repayment of a note they say is guaranteed by the developer. Evergrande’s bond due 2022 lost 0.8 cent to 23.5 cents on the dollar, Bloomberg-compiled prices showed Thursday. Nonpayment
The funding stress for Chinese property developers is deteriorating: There is a feedback loop underway between deteriorating developer balance sheets and counterparty risk: At the end of June, the aggregate interest coverage ratio of 21 big Hong Kong-listed Chinese real estate developers fell to 0.94, the worst in at least a decade, according to Reuters
There’s a new acquisition: China Evergrande Group and its property-services arm were halted in Hong Kong stock trading amid a report that the developer agreed to sell a controlling stake in the unit to raise much-needed cash. Trading of Evergrande was suspended pending an announcement on a “major transaction,” the developer said Monday in a stock
Listening to the slow grind of cognitive gears about China is painful. Goldman: Macro volatility has had limited impact, so far, on performance across the Asia credit market. The recent move higher in US Treasury yields and downside pressures on China growth have not provided a negative drag on Asia credit spreads, which have mostly
Evergrande news is thick and fast. Some kind of selective bail-out and bail-in is underway depending upon whether you’re Chinese or not. Sincocism: Evergrande appeases high-yield onshore investors with partial cash repayment as some local governments bar property-for-debt swap | South China Morning Post In a notice seen by the Post, the Housing and Urban-Rural
It’s only 50% higher than thought when off-balance sheet liabilities are included so no worries. Goldman: Market concerns center on potential spillover from Evergrande concerns. Whilst prices on Evergrande bonds have ranged between mid to high 20s over the past two weeks, the rest of the China property HY space has been under pressure, with
The Evergrande creditors are piling up and there is no relief in spreads: The world’s most indebted developer needs to pay a $45.2 million coupon on Wednesday for a dollar bond that matures 2024, Bloomberg-compiled data show. The payment has a 30-day grace period before default could be declared, according to the note’s offering memorandum.
Great news! China is fixed: The Beijing-based builder said a letter written by a local executive for verbal communication with officials in eastern Shaoxing city last week was only a draft that was “accidentally” sent to a chat group outside the company. It wasn’t submitted to the government, Sunac said in a statement. The group’s
So says Bloomie: A Nation of Empty Apartments There are enough empty apartments in China to house an estimated 90 million people. Note the source. And here it is: There is enough empty property in China to house over 90m people, says Logan Wright, a Hong Kong-based director at Rhodium Group, a consultancy. To put
Note from Goldman: Recent sharp cuts to production in a range of high-energy-intensity industries add to the already significant downside pressures in the growth outlook. The production cuts are due primarily to increased regulatory pressure on provinces to meet energy use targets for 2021 but also reflect surging energy prices in some cases. The NDRC
Exhibit #3455 is Chris Joye on the money: On the subject of ESG, a similarly simple insight could have saved investors from exposure to the extreme ructions resulting from fears that large Chinese companies that issue vast quantities of debt into US dollar markets, like Evergrande and Huarong, will default on their repayments. And that is don’t
For much of this year, we have heard the bullish narrative from China watchers that any property development slowdown will be offset by increasing infrastructure spending. That has not played out at all. Indeed, infrastructure has collapsed almost as fast as property investment with funding down some 37% year to date: This is no surprise.
Goldman with a note that blows up its own ‘long commodities’ recommendation: Q: What has led to the current stresses in China’s property market? A: The authorities imposed new regulations over the past year that significantly constrained property-related borrowing, particularly by more levered developers. China’s property sector has long been a major engine of growth
Wall Street spruikers are steadily narrowing their bullish bets on the new “commodities supercycle”. Although headline indexes for commodities are still very high, they are increasingly reliant upon energy for any bull case. As we saw last week, the numero uno copper and metals bull, Goldman Sachs, is hedging its bets big time: We divide
I noted earlier this week how China has officially sought to join the 11 member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into effect in late 2019. However, Australia has indicated that it will block China’s admission on the grounds that it has contravened existing agreements with trade strikes against Australian exports.
Goldman with the note: Unprecedented regulatory tightening in the largest asset class globally Regulatory actions in China Internet have resulted in more than US$1tn market cap loss on the tech sector since mid-Feb, but in the past two weeks, investor focus has shifted to the US$60tn China property market which is linked to ~20% of
This is why you should never invest in China. There is no transparency. Evergrande has descended into an every rumour debacle in which interest now run the show as Beijing dithers. Zero Hedge wraps it nicely: Update (0810ET): Piling on to the chaotic swings in Evergrande, Bloomberg reports that the embattled property developer’s electric-car unit has missed
Note from Michael Pettis at Carnegie: Policymakers in Beijing are in a tough position on what to do about Evergrande, the Chinese property developer whose slow collapse has transfixed the markets. Evergrande is the most-indebted property developer in the world. Its on-balance-sheet liabilities amount to nearly 2 percent of China’s annual GDP, and its off-balance-sheet obligations add up to as much
Wall Street is busy begging China to stimulate. It knows no other way. Yesterday Goldman Sachs was on its knees: Looking beyond the immediate risks and uncertainties around Evergrande, we believe two other policy adjustments are also needed. First is the overall macro policy stance. Despite the recent increases in on-budget and off-budget fiscal spending
The problem with getting the diagnosis wrong is that you mistreat the symptoms. If you think you have a cold but really have a brain tumor then soldiering on with Codral is not a great idea. Evergrande yesterday released an unbelievably vague statement about reaching some deal with someone, somewhere. More importantly, the PBoC injected