China Economy

6

Evergrande turns every rumour

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

3

Michael Pettis on Evergrande et al

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

0

What’s the trigger for more Chinese stimulus?

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

6

Evergrande is symptom not cause

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

3

Evergrande contagion “contained so far”

TS Lombard has a crack: The path from last year’s growth slump back to economic normalization is becoming increasingly bumpy. On top of Xi Jinping’s “common prosperity” drive and crackdown on internet platform firms, Covid’s Delta variant and the impending fall of the property behemoth Evergrande are new upsets. Under China’s “zero-tolerance” policy on controlling

12

Evergrande shock turns China shock

Bill Bishop at Sinocism sums it well: Thanks for your patience last week. The PRC is on holiday today and tomorrow for the Mid-Autumn Festival. The newsletter will be off tomorrow unless there is something interesting going on. Evergrande executives and its regulators are unlikely to be enjoying this holiday. Evergrande the grande grey rhino

5

The full Evergrande maelstrom

Full note from Zero Hedge. I agree with the premises but not the conclsuion for another broad stimulus. At least, not yet. Xi appears committed to giving this reform round a genuine crack.   Something historic will happen this week: as Beijing warned last week, China’s largest and most indebted property developer, Evergrande, will default on some (or all)

11

Evergrande more Greece than Lehman

The Evergrande saga is intensifying daily. The firm’s equity is all but gone. Its debt barely trades. Its sales and assets are crashing in value. Its brand damage is ruinous: Moreover, we have now reached a point of open crisis for the entire Chinese property development sector. Funding spread blowouts are indistinguishable from being frozen.

29

Evergrande losers take company executives hostage

Via Straits Times: Footage of Evergrande’s management being held hostage in company offices by anxious retail investors made the rounds on China’s social media earlier this week. “I have with me Nanchang’s top Evergrande representative surnamed Chen,” said WeChat user Yang Qiwen, referring to the city in Jiangxi province in south-eastern China. The posting included

29

Evergrande breaks Chinese property

Evergrande. Remember the name. Australian historians will. Yesterday it broke the Chinese property sector as its bonds were suspended: In order to ensure fair information disclosure and protect the interests of investors, after the company’s application, all existing corporate bonds of Evergrande Real Estate will be suspended for one trading day from the opening of the

37

Evergrande defaults

Evergrande defaults: Chinese authorities have told major lenders to China Evergrande Group not to expect interest payments due next week on bank loans, according to people familiar with the matter, taking the cash-strapped developer a step closer to one of the nation’s biggest debt restructurings. The Ministry of Housing and Urban-Rural Development told banks in

9

Chinese old economy crash lands

Down she goes and where it stops nobody knows. Chinese August data is out. It is OK at the headline level but downright disastrous at the commodities level. Headline data all missed expectations. Year to date fixed asset investment was OK at 8.9%, industrial production good at 13.1% and retail sales at 19%. But when

2

Chinese house prices stall

Chinese new home prices are out and are stalling, up just 0.2% in August and 4.2% over the year: The majority of cities now have flat or falling prices: All tiers are slowing: Here’s the city-by-city: If the property developer bust sinks prices then all bets are off in China.

41

Worldcom. Enron. Lehman. Evergrande.

Evergrande is going bust and nobody knows what that means. Here is its HK regulatory filing that reads like an obituary: Beijing has also retained bankruptcy specialists. The unhappy investors who were happy to take huge yields but not the risk that comes with it stormed Evergrande head office: “Evergrande return our money!” pic.twitter.com/F6zbJu21jF —

8

Evergrande hard landing turns fireball crash

There is nothing that incenses the Chinese population more than money lost on realty. Evergrande is on the receiving end of that anger: China Evergrande Group is facing mounting protests by homebuyers, retail investors and even its own employees, raising the stakes for authorities in Beijing as they try to prevent the property giant’s debt

7

Chinese property developers dive towards hard landing

Chinese credit is slowing and the property development segment is diving into a hard landing. The signals are everywhere. Goldman has more: Evergrande developments the main driver for near term risks. With Evergrande bonds pricing in elevated risks of default, investors are questioning how “fat” the tail risk is for China property bonds. More specifically,

4

Chinese credit goes down down

Chinese credit for August was out Friday night the news is poor. TSF came in at 2.9tr yuan: This is 17.3% lower than last August and the 3MMA is still down 15.9% to boot: Year to date new credit is still hovering around -16% and has been for six months: The rolling annual mountain is

3

Iron ore hits new low as Evergrande gets extend and pretend

The soft bailout of Evergrande has begun: Regulators in Beijing have signed off on a China Evergrande Group proposal to renegotiate payment deadlines with banks and other creditors, paving the way for a temporary reprieve as the cash-strapped developer struggles to come to grips with more than $300 billion of liabilities. China’s Financial Stability and

22

China accuses Australia of ‘bullying’

A Chinese Communist Party (CCP) has accused Australia of “bullying” and using China’s economic coercion for “selfish political gain”: Chinese Foreign Ministry Spokesman Wang Wenbin said… “China has never done anything detrimental to Australia’s sovereignty”… “The label of so-called ‘economic coercion’ can never be pinned onto China. Instead, it is Australia that stands guilty of

15

Evergrande’s death march

I could write this one up but ZeroHedge has done a good job of it. The takeout is materially lower Chinese property starts ahead… With algos busy chasing upward momentum in futures and global stocks, the biggest – if largely ignored story – remain the ongoing collapse of “China’s Lehman“, the $300+ billion China Evergrande,

10

What is Common Prosperity?

TS Lombard has a crack at it: The mantra of “Common prosperity for all”, proclaimed by Xi Jinping in more than 60speeches this year, is an ideologically appropriate slogan for a Communist Party after decades of lop-sided growth and rising inequality. The promise of greater fairness, re-balancing between labour and capital, increased social provision is

4

Chinese hard landing proceeds apace

A seriously behind the curve Goldman Sachs is still trying to defend its capital-devouring long commodity call. Having completely missed the severity of the China slowdown, and associated commodity crash, it now says a rebound is imminent: We have to add to the mix a combination of weather related disruptions, rising regulatory risk andthe material

9

Evergrande contagion sweeps Chinese developers

It’s on like Donkey Kong for Chinese developers. Evergrande is going out of business and other weak players are being sucked in: A worsening selloff in China Evergrande Group’s dollar bonds is once again spreading to other developers, raising the stakes for Chinese authorities as they mull whether to support billionaire Hui Ka Yan’s embattled

3

Evergrande hurtles into the abyss

It’s fun to watch. China’s Evergrande, the most indebted developer in the known universe, is hurtling into the abyss. Its deleveraging efforts have all been for nought: On the face of it, China Evergrande Group made progress cutting its debt load in the first half of the year. On closer examination, paying its dues got

10

No respite in building China bust

Or should that be no respite in the bust in Chinese building? Evergrande is going out of business: China Evergrande Group warned that it risks defaulting on borrowings if its all-out effort to raise cash falls short, rattling bond investors in the world’s most indebted developer. “The group has risks of defaults on borrowings and

8

China intensifies property sector crush

I am starting to admire this. The rebooted Chinese determination to force structural reform onto its economy is precisely the same as that needed in the “capitalist west”. It’s all about ending property capital misallocation and restoring productivity growth as the prime income driver. And it is NOT over. First up, the grand political narrative