PPCC - Pisitófilos Creditófagos - HoT SuMMeR 2021

[newclo]

... Y dejo por aquí esta frase traída por Bendita....
la quiero tener muy presente:

"No espere una vida fácil y esté listo para luchar",
advierte Xi de China a los funcionarios

[Derby]

FQA del NYT 

https://www.nytimes.com/2021/09/10/business/evergrande-debt-crisis.html

Why China’s economy is threatened by a property giant’s debt problems

The real estate developer Evergrande once binged on debt. Now the music has stopped, investors are panicking and experts are warning of an imminent failure.

Every once in a while a company grows so big and messy that governments fear what would happen to the broader economy if it were to fail. In China, Evergrande, a sprawling real estate developer, is that company.

Evergrande has the distinction of being the world’s most debt-saddled property developer and has been on life support for months. A steady drumbeat of bad news in the recent weeks has accelerated what many experts warn is inevitable: failure.

The ratings agency Fitch said this week that default “appears probable.” Moody’s, another ratings agency, said Evergrande is out of cash and time. Evergrande is faced with more than $300 billion in debt, hundreds of unfinished residential buildings, and angry suppliers who have shut down construction sites. The company has even started to pay overdue bills by handing over unfinished properties.

Observers are watching to see if Chinese regulators make good on their pledge to clean up the country’s corporate sector by letting “debt bombs” like Evergrande collapse.

How did Evergrande become such a problem?

In its glory days a decade ago, Evergrande sold bottled water, owned China’s best professional soccer team and even briefly dabbled in pig farming. It became so big and sprawling that it even has a unit that makes electric cars, though it has delayed mass production.

Today, Evergrande is seen as a rickety threat to China’s biggest banks.

The company, which was founded in 1996,  :roto2:rode China’s epic property boom that urbanized large swathes of the country and resulted in nearly three quarters of household wealth being tied up in housing. This put Evergrande at the center of power in an economy that came to lean on the property market for supercharged economic growth.

Its billionaire founder, Xu Jiayin, is a member of the Chinese People’s Political Consultative Conference, an elite group of politically well-connected advisers. Mr. Xu’s connections probably gave creditors more confidence to keep lending money to Evergrande as it grew and expanded into new businesses. Eventually, though, Evergrande ended up with more debt than it could pay off.

In recent years, it has faced lawsuits from home buyers who are still waiting for the completion of apartments they partially paid for. Suppliers and creditors have claimed hundreds of billions of dollar in outstanding bills. Some have suspended construction on Evergrande projects.

Why is the company in so much trouble now?

Evergrande might have been able to keep going if it weren’t for two problems. First, Chinese regulators are cracking down on the reckless borrowing habits of property developers. This has forced Evergrande to start selling off some of its sprawling business empire. That’s not going so well. It has yet to sell its electric vehicle business, despite talks with prospective buyers. Some experts say buyers are waiting for a fire sale.

Second, China’s property market is slowing and there is less demand for new apartments. This week the National Institution for Finance and Development, a prominent Beijing think tank, declared the property market boom “has shown signs of a turning point,” citing weak demand and slowing sales data.

Much of the cash that Evergrande has been able to drum up has come from presold apartments that aren’t yet completed. Evergrande has nearly 800 projects across China that are unfinished, and as many as 1.2 million people who are still waiting to move into their new homes, according to research from REDD Intelligence.

Evergrande has slashed prices on new apartments but even that has failed to entice new buyers. In August it made a quarter fewer sales in than it did a year ago.

Will Chinese regulators step in to save it?

Beijing will be tempted to say “no,” but a collapse could cause serious damage, leaving homeowners, suppliers and domestic investors — potentially numbering in the millions — unhappy. And Beijing has ultimately moved to shore up other large companies with big problems in the past.

For years many investors gave money to companies like Evergrande because they believed that, at the end of the day, Beijing would always step in to rescue it if things got too shaky. And for decades, the investors have been right. But over the past several years, the authorities have shown greater willingness to let companies fail in order to rein in China’s unsustainable debt problem.

The authorities hauled Evergrande executives into a meeting last month and told them to get its debt in order. They have also continued to tell its banks to scale back their lending to the developer.

How would Evergrande’s failure affect China’s economy?

A campaign by the central bank to tame property debt and reduce the banking sector’s exposure to troubled developers should mean that an Evergrande failure would have less of an impact on China’s financial system.

The reality may be more complicated.

Panic from investors and home buyers could spill over into the property market and hit prices, affecting household wealth and confidence. It could also shake global financial markets and make it harder for other Chinese companies to continue to finance their businesses with foreign investment. Writing in The Financial Times last week, the billionaire investor George Soros warned that an Evergrande default could cause China’s economy to crash.

Chen Zhiwu, a professor of finance at the University of Hong Kong, said a failure could result in a credit crunch for the entire economy as financial institutions become more risk averse. An Evergrande failure, he added, was “not good news to the financial system or the overall economy.”

Not everyone is as pessimistic. Bruce Pang, an economist at China Renaissance Securities, said a default could lay the groundwork for a healthier economy in the future. “If Evergrande were to fail with the fading belief of ‘too big to fail,’ it will prove Beijing’s more tolerance for defaults despite pains and disruption in the short term,” said Mr. Pang.

Should foreign investors be concerned?

Foreign investors are owed $7.4 billion in bond payments from Evergrande next year alone. At various points this year they have panicked, sending trading of the bonds in the secondary market to new depths. Over the past week, Evergrande bond notes were going for 50 cents on the dollar. Trading in its debt was so frenzied at one point that regulators briefly put a stop to trading.

The company’s main share listing in Hong Kong has lost more than three-quarters of its value over the past year.

The foreign investors are worried that if Evergrande fails, all the money they are owed will vanish into thin air. The authorities in Beijing have indicated that they are no longer willing to bail out foreign and domestic bondholders. In any bankruptcy proceeding, they would be low on the list of creditors to get any of the Chinese company’s assets.

[Derby]

Creo que no tenemos la opinión de Soros en el hilo 

https://www.ft.com/content/ecf7de34-e595-4814-9cbd-4a5119187330

George Soros: Investors in Xi’s China face a rude awakening

The leader’s crackdown on private enterprise shows he does not understand the market economy


Xi Jinping, China’s leader, has collided with economic reality. His crackdown on private enterprise has been a significant drag on the economy. The most vulnerable sector is real estate, particularly housing. China has enjoyed an extended property boom over the past two decades, but that is now coming to an end. Evergrande, the largest real estate company, is over-indebted and in danger of default. This could cause a crash.

The underlying cause is that China’s birth rate is much lower than the statistics indicate. The officially reported figure overstates the population by a significant amount. Xi inherited these demographics, but his attempts to change them have made matters worse.

One of the reasons why middle-class families are unwilling to have more than one child is that they want to make sure that their children will have a bright future. As a result, a large tutoring industry has grown up, dominated by Chinese companies backed by US investors. Such for-profit tutoring companies were recently banned from China and this became an important element in the sell-off in New York-listed Chinese companies and shell companies.

The crackdown by the Chinese government is real. Unnoticed by the financial markets, the Chinese government quietly took a stake and a board seat in TikTok owner ByteDance in April. The move gives Beijing one seat on a three-person board of directors and first-hand access to the inner workings of a company that has one of the world’s largest troves of personal data. The market is more aware that the Chinese government is taking influential stakes in Alibaba and its subsidiaries.

Xi does not understand how markets operate. As a consequence, the sell-off was allowed to go too far. It began to hurt China’s objectives in the world. Recognising this, Chinese financial authorities have gone out of their way to reassure foreign investors and markets have responded with a powerful rally. But that is a deception. Xi regards all Chinese companies as instruments of a one-party state. Investors buying into the rally are facing a rude awakening. That includes not only those investors who are conscious of what they are doing, but also a much larger number of people who have exposure via pension funds and other retirement savings.


Pension fund managers allocate their assets in ways that are closely aligned with the benchmarks against which their performance is measured. Almost all of them claim that they factor environmental, social and corporate governance (ESG) standards into their investment decisions.

The MSCI All Country World Index (ACWI) is the benchmark most widely followed by global equity asset allocators. An estimated $5tn is passively managed, which means that it replicates the index. A multiple of this amount is actively managed, but it also closely tracks the MSCI index.

In MSCI’s ACWI ESG Leaders Index, Alibaba and Tencent are two of the top 10 constituents. In BlackRock’s ESG Aware emerging market exchange-traded fund, Chinese companies represent a third of total investments. These indices have effectively forced hundreds of billions of dollars belonging to US investors into Chinese companies whose corporate governance does not meet the required standard — power and accountability is now exercised by one man who is not accountable to any international authority.

The US Congress should pass a bipartisan bill explicitly requiring that asset managers invest only in companies where actual governance structures are both transparent and aligned with stakeholders. This rule should obviously apply to the performance benchmarks selected by pensions and other retirement portfolios.

If Congress were to enact these measures, it would give the Securities and Exchange Commission the tools it needs to protect American investors, including those who are unaware of owning Chinese stocks and Chinese shell companies. That would also serve the interests of the US and the wider international community of democracies.

SEC chair Gary Gensler has repeatedly warned the public of the risks they take by investing in China. But foreign investors who choose to invest in China find it remarkably difficult to recognise these risks. They have seen China confront many difficulties and always come through with flying colours. But Xi’s China is not the China they know. He is putting in place an updated version of Mao Zedong’s party. No investor has any experience of that China because there were no stock markets in Mao’s time. Hence the rude awakening that awaits them.

https://www.expansion.com/economia/financial-times/2021/08/31/612df853e5fdea1f3e8b461f.html

[newclo]

Evergrande es un

   BOOM !

En toda regla

Creo que han encendido la mecha y el petardo lo tenemos nosotros en las manos

[Elcasco]

https://www.bloomberg.com/news/articles/2021-09-10/deutsche-team-sees-risk-of-hard-equity-valuation-correction

More Strategists Say a Storm Is Brewing in the U.S. Stock Market

Strategists from almost all the top Wall Street banks have come out this week with a nervous message about the U.S. stock market.

The latest views hail from Deutsche Bank AG and Goldman Sachs Group Inc., and echo earlier pronouncements from Morgan Stanley, Citigroup Inc. and Bank of America Corp. 

While investment banks tend to be measured in their outlooks, there are common threads that underpin their predictions that the market is vulnerable. Valuations are at historical extremes, stocks have rallied non-stop for seven months, the economy looks soft and the Federal Reserve is preparing to taper stimulus.

“The risk that the correction is hard is growing,” wrote Deutsche Bank equity strategists including Binky Chadha. “Valuation corrections don’t always require market pullbacks, but they do constrain returns.”

Here’s a rundown of commentary this week:

Binky Chadha, equity strategist at Deutsche Bank

“Equity valuations at the market level are historically extreme on almost any metric.” Trailing and forward price-earnings ratios, as well as valuation metrics based on enterprise value and cash flow, are all in the 90th percentiles, he said. 

James Congdon, co-head of Canaccord Genuity’s research division Quest

“Global stock markets may be entering a period of turmoil.” He added that investors should favor stronger businesses with robust cash flows over weaker and more speculative companies.

Dominic Wilson, strategist in economics research at Goldman Sachs

“While the broad U.S. market outlook is solid in our central case, we think peak cyclical optimism in the U.S. may be behind us.” The strategists said hedges look attractive, especially on a shorter time horizon.

Andrew Sheets, cross-asset strategist at Morgan Stanley

“We are going to have a period where data is going to be weak in September at the time when you have a heightened risk of delta variant and school reopening.” The bank cut U.S. equities to underweight and global stocks to equal-weight on Tuesday.

Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America

“The S&P 500 has essentially turned into a 36-year, zero-coupon bond,” she said. “If you look at the duration of the market today, it’s basically longer duration than it’s ever been. This is what scares me.”

The threat is that “any move higher in the cost of capital via interest rates, credit spreads, equity risk premia, that’s basically going to be a huge knock on the market relative to the sensitivity we’ve seen in the past,” she said.

[senslev]

2022 Prediction: Economic Depression Will Hit US (Here’s Why)

https://www.youtube.com/watch?v=uhzK9YhrtEU

Una vez visto el vídeo tendría sentido lo que están haciendo los BBCC. Estamos en una depresión, el problema está en los datos que se utilizan para medir el PIB y la no-inflación y que parezca que no es así. Para mi tiene sentido porque de los contrario no se entienden las medidas monetarias expansivas no convencionales durante más de 10 años.

[senslev]

Pablo Gil: la FED pone en duda su ética profesional

Habla de la no-correlación y la no-inflación, además de la catadura moral de los banksters de la Fed.

https://www.youtube.com/watch?v=1JbuDjqukiU

[Derby]

Las fases de duelo...

https://www.bnnbloomberg.ca/evergrande-chairman-pledges-repayment-of-wealth-products-rthk-1.1650678

Evergrande Chairman Pledges Repayment of Wealth Products: RTHK

(Bloomberg) -- China Evergrande Group Chairman Hui Ka Yan said the company will ensure full and early repayment of all maturing wealth management products, Radio Television Hong Kong reported, citing a company press release.

Hui was cited as saying that while Evergrande is now faced with unprecedented difficulties, its fundamentals haven’t changed.  He also said that the strongest guarantee of repayment would come from efforts to resume work and production, deliver projects, conduct sales well and resume normal operations, the report added.

The distressed developer’s complex web of obligations to banks, bondholders, suppliers and homeowners has become one of the biggest sources of financial risk in the world’s second-largest economy. Speculation over Evergrande’s fate has prompted dramatic swings in its bonds that has spilled over to other weaker-rated property firms.

Evergrande released an interim repayment plan Thursday for matured wealth management products held by retail investors, according to a REDD report Friday. As part of the plan, retail investors holding more than 100,000 yuan ($15,518) of the products will have payments extended by two to four years and amortized, REDD reported. 

[Derby]

https://www.straitstimes.com/asia/east-asia/angry-evergrande-homebuyers-protest-against-construction-halt

Angry Evergrande home buyers protest against construction halt

(...) More than 100 home buyers in white T-shirts emblazoned with the phrase "Resume construction, Evergrande" lined up before the housing bureau of the city's Nansha district on Thursday (Sept 9), according to people who attended the protest and asked not to be named because of fear of retribution.

They said the building of units they purchased in Evergrande Peninsula, a project of almost 5,000 apartments, has been halted since May.

(...)After a rare public rebuke from regulators, Evergrande billionaire founder Hui Ka Yan doubled down on his commitment to complete projects, issuing what he called a "military order" to ensure property construction and delivery.

[Derby]

https://www.enca.com/news/blackstone-scraps-3bn-takeover-property-giant-soho-china

Blackstone scraps $3bn takeover of property giant Soho China

CHINA - A US private equity firm has abandoned a planned $3 billion purchase of Chinese property developer Soho China, with antitrust authorities yet to approve the deal.

Blackstone had hoped to expand its presence in the country through acquisition of Soho China, which holds prime real estate in cities like Beijing.

But its offer had been conditional upon clearance from China's competition authorities, and the parties concluded that the pre-conditions would not be satisfied within a designated time frame, according to a filing to the Hong Kong exchange dated Friday.

Both sides have now "agreed that the offer should not be made," the filing added.(...)

[PastorMesetario]

Ay madre, Evelglande...

El cierre de ayer fue bastante feo, pero estamos todavía muy lejos de peligros serios. Es la primera sesión que veo en mucho tiempo en la que veo aparecer esa presión compradora brutal y la tumban sin piedad.

[Derby]

https://www.france24.com/en/asia-pacific/20210910-evergrande-s-collapse-would-have-profound-consequences-for-china-s-economy

Evergrande’s collapse would have ‘profound consequences’ for China’s economy

Investors are bracing for the increasing risk that Chinese real estate colossus Evergrande will collapse under the weight of more than $300 billion of debt. But experts say the Chinese Communist Party will have no choice but to save a company that is so emblematic of its economic growth model – and whose collapse would send shockwaves across the global economy.

https://www.france24.com/fr/%C3%A9co-tech/20210909-evergrande-le-conglom%C3%A9rat-immobilier-symbole-du-too-big-to-fail-%C3%A0-la-chinoise

[JoaquinR]

Señores, ahora mismo me imagino una caricatura del Punch, como se hacían antes de la Gran Guerra. Don Xi sentado en un bar con un Farias en la boca, con todos los poderosos del mundo a su alrededor, Evergrande a punto de caer, Xi con la mano puesta para darle el último empujoncito y los poderosos diciendo "no hay huevos".

A lo que la respuesta de Xi muy bien puede ser "sujétame el cubata".

[senslev]

[Spheratu]

Detecto mucha fe en la honestidad del amigo Xi. Yo no las tengo todas conmigo. Cuando hay dinero de por medio, las ideologías se diluyen y si hay que salvar a everglande, se la salva.
No se, ya veremos. Yo creo que la crisis de 2008 ha creado un nuevo paradigma, el de todo vale y whatever it takes. Al fin y al cabo, al menos de momento, no parece haber consecuencias ante la monetización de lo que sea menester para mantener el chiringuito. Insisto, todo vale, nada quiebra, al menos hasta hoy, 11 de septiembre de 2021.
Espero tragarme mis palabras, pero realmente...no les da la sensación de que el establishment planetario en pleno se siente muy a gusto con el nuevo paradigma? Dar marcha atras a una economía mas "a la antigua" no creo que quepa ya en ninguna cabeza.