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Evergrande shares plunge as much as 87% as trading resumes after 17 months

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Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#171

Post by HDThoreaun »

caeril wrote: post #162
dilippkumar wrote: post #61

As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate): 1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments. 2. China is going through a weird demographic situation. The younger ge…

As an aside, but related to this topic, I can't wrap my head around on how one can purchase an apartment. My house's warranty deed explicitly defines the property I own, with references to plat maps that have very specific survey measurements, etc. But if I buy a slice of a high rise building, what does the deed say? What does the plat map look like? Do I just own an N% slice of the underlying land? Do I own specific…

In China the state owns all the land so this is less of a concern I guess. In the US there's usually some sort of HOA that you get a vote in that owns the land.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#172

Post by ww520 »

treis wrote: post #170
ww520 wrote: post #166

Earlier quoted context omitted.

Those have equal obligations.

Can you expand? Not sure what you mean.

I assume you were talking about their 3.2T foreign exchange reserve. A large portion of that is foreign direct investment money from outside which needs to be paid back when moved out. China has up to 2.7T foreign debt as of last year, which needs to be paid back in foreign currencies. There're a fair amount of currency needs for facilitating import and export. There's not much left in the pool.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#173

Post by qwytw »

ben_w wrote: post #142
sam_goody wrote: post #116

Earlier quoted context omitted.

>> What's the worst that can happen? > The Great Depression, the Great Recession. If China descends into chaos, it could be alot worse than the Great depression, since so much of the world depends on China, and since they have a crazy arsenal of weapons.

The Great Depression was almost certainly a contributing factor to WW2.

Yes, the nazis were a fringe political part polling below 3% before 1929. The Weimar republic was relatively stable and it seemed that the biggest economical issues were already behind..

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#174

Post by bobthepanda »

dirtyid wrote: post #56
bobthepanda wrote: post #46

Earlier quoted context omitted.

The issue is that the bubble should’ve popped probably even five or ten years ago, but then the government allowed credit extension and the bubble kept on. The recent hard lines, with no sign of easing after multiple defaults, is a new thing.

TBF arguably RE bubble was being addressed 5-10 years ago, there was domestic construction slump in 2012-2017 - where indicators like floor space completion and construction employment peaked. Then 2017 crack down on shadow banking which drove developers + local gov to increase presales, turning it into a financial instrument to keep the taps going. Then hard 3RL in 2020. Could have probably smashed skulls sooner and…

With how big the bubble has gotten a painful explosion was going to be inevitable no matter what.

Markets considered expensive in the West have significantly lower house price to income ratios. In San Francisco it is 12.3x, in London it is 13.9x, in Paris it is 18.8x, and in Shenzhen it is a whopping 40x.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#175

Post by rnk »

FooBarWidget wrote: post #36
rnk wrote: post #31

Earlier quoted context omitted.

The US didn't have anything to do with evergrande afaik, and paying for property before it's built is a bad idea. But China can still try to deal with this by blaming the US for all ills and pushing for war with Taiwan to distract everyone - that works almost every time!

Okay so where is all the media blaming the economic issues on US? I sure haven't seen any on TV.

I don't know that it's happening now, I was making a suggestion that it could happen. If you're having economic troubles in a country, especially in an authoritarian country, blaming the outside world for your troubles can be a smart thing. No one can really argue with you in a dictatorship - if anyone is powerful enough to contest with you, you just kick them out of the ruling party, just like what actually happened in China with Xi removing Hu Jintao in a very public way at the party Congress. Another example is Russia threatening to invade the smaller countries around them if they make treaties with Western countries, and then invading them for being "bad" like in Ukraine, Georgia, Moldova, etc.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#176

Post by ww520 »

ww520 wrote: post #104
dilippkumar wrote: post #61

As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate): 1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments. 2. China is going through a weird demographic situation. The younger ge…

The problem started long time ago when the central government took most of the tax revenue from the local provincial and city governments leaving them without funding to operate. As a compensation, they were granted the authority to sell the land use right of their lands. Land is never privately owned in China. What is sold is the right to use the land for a period of time. Since the state owned all the lands and the…

As per request, references after some quick searches. I cannot edit the original comment; here's a quick list.

Tax-sharing system between the central and local governments in China.

- https://www.encyclopedia.com/international/applied-and-socia...

Land ownership in China.

- https://www.lehmanlaw.com/resource-centre/laws-and-regulatio...

Government's reliance on land sales over the years.

- https://www.piie.com/research/piie-charts/local-governments-...

Local governments' debts related to housing.

- https://en.wikipedia.org/wiki/Local_government_financing_veh...

- https://www.reuters.com/world/china/debt-laden-local-governm...

Limited banks' lending to developers.

- https://therealdeal.com/national/2021/01/03/china-limits-pro...

Housing price to income, one indicator among many on housing affordability.

- https://www.numbeo.com/property-investment/rankings_by_count...

Vacancy info

- https://www.hindawi.com/journals/complexity/2020/5104578/

- https://www.bloomberg.com/news/articles/2023-08-16/china-s-h...

- https://www.nber.org/system/files/working_papers/w25297/w252...

Housing glut

- https://realmoney.thestreet.com/investing/global-equity/ever...

- https://www.nytimes.com/2021/10/12/business/evergrande-homeb...

Real estate developers ran out of money.

- https://www.cnn.com/2021/12/09/investing/evergrande-default-...

- https://www.cnn.com/2021/09/24/investing/china-evergrande-gr...

- https://www.theguardian.com/world/2023/aug/18/china-property...

- https://www.cnn.com/2022/07/04/economy/chinese-developer-shi...

- https://www.cnbc.com/2021/10/18/china-property-defaults-risk...

Developer owes unpaid taxes

- https://www.gnewswire.org/en/2023/08/20/chinese-real-estate-...

Governments banning on price drop on home sales. Developers fined. (Run them through Google Translate.)

- https://www.guancha.cn/ChanJing/2021_09_19_607837_s.shtml

- https://finance.sina.com.cn/wm/2023-05-09/doc-imytcwre876472...

- https://new.qq.com/rain/a/20230507A04S7S00

Shadow banks and investment trusts defaulting

- https://www.cnn.com/2023/08/18/economy/china-zhongrong-trust...

- https://www.reuters.com/business/finance/china-trust-deficit...

Share of housing sector in GDP.

- https://scholar.harvard.edu/files/rogoff/files/the_size_of_c...

- https://scholar.harvard.edu/files/rogoff/files/nber_27697_pe...

Large household wealth tied up in home value

- https://fortune.com/2021/12/02/chinese-real-estate-investing...

Homeowners stopped paying their mortgages

- https://www.bbc.com/news/world-asia-china-62402961

- https://www.cnn.com/2022/07/14/economy/china-property-crisis...

Government running out of money.

- https://www.hindustantimes.com/world-news/chinese-premier-li...

Government cutting salaries, pension, and services.

- https://www.visiontimes.com/2022/02/02/shenzhen-civil-servan...

- https://www.republicworld.com/world-news/china/china-slashes...

- https://www.aljazeera.com/economy/2023/5/11/chinas-cash-stra...

- https://thehongkongpost.com/2022/02/01/china-asked-governmen...

- https://www.cnn.com/2023/03/31/economy/china-pension-protest...

- https://www.nytimes.com/2023/02/15/business/wuhan-china-prot...

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#177

Post by FooBarWidget »

rnk wrote: post #175
FooBarWidget wrote: post #36

Earlier quoted context omitted.

Okay so where is all the media blaming the economic issues on US? I sure haven't seen any on TV.

I don't know that it's happening now, I was making a suggestion that it could happen. If you're having economic troubles in a country, especially in an authoritarian country, blaming the outside world for your troubles can be a smart thing. No one can really argue with you in a dictatorship - if anyone is powerful enough to contest with you, you just kick them out of the ruling party, just like what actually happened…

It "could" happen. On the other hand, it could also not happen. This is pure speculation on your part. Whatever happened to looking at evidence? This isn't the first time China has had economic trouble.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#178

Post by ww520 »

throwaway161718 wrote: post #110
ww520 wrote: post #104

Earlier quoted context omitted.

The problem started long time ago when the central government took most of the tax revenue from the local provincial and city governments leaving them without funding to operate. As a compensation, they were granted the authority to sell the land use right of their lands. Land is never privately owned in China. What is sold is the right to use the land for a period of time. Since the state owned all the lands and the…

"The financial institutes like banks, shadow banks, investment funds, etc have lost huge amount of money" My understanding of the core problem is - Money has to come from somewhere. It is the result of China becoming world's workshop. Chinese have 45%+ saving rate and those powered up the FIs' balance sheets. This money funded all the buying of land rights, development of housing etc. How Chinese govt. deals with the…

China has also printed a lot of money. As the currency is not freely exchangeable, it's largely unnoticed.

[1] https://www.statista.com/statistics/458148/china-m2-broad-mo...

[2] https://thesoundingline.com/kyle-bass-china-has-printed-more...

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#179

Post by licebmi__at__ »

barkingcat wrote: post #164
asu_thomas wrote: post #156

Earlier quoted context omitted.

> the government didn't really want to arrest all the people, cause that would indicate they are not in control Objectively, not arresting them indicates they are not in control more than arresting them would.

of course, but the central government is all about seeming to be in control, not objectively in control. mass arrest -> leads to questions about why 1000's of young couples are being arrested due to them not wanting to pay mortgages on houses they can't move into for years, and has no construction progress (the construction is abandoned), and this is a contagion that will lead to another city starting to rebel, leadi…

I know that this comment will seem as pro china, but really your comment is really weird and almost funny. The way you portray the two perspectives sounds like a good Chinese government action being spun like a bad thing because actually "China bad".

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#180

Post by kwere »

J_Shelby_J wrote: post #163
caeril wrote: post #162

Earlier quoted context omitted.

As an aside, but related to this topic, I can't wrap my head around on how one can purchase an apartment. My house's warranty deed explicitly defines the property I own, with references to plat maps that have very specific survey measurements, etc. But if I buy a slice of a high rise building, what does the deed say? What does the plat map look like? Do I just own an N% slice of the underlying land? Do I own specific…

All ownership is a legal fiction, including land ownership.

Yeah, If you don't pay dues to the government on the property and they can take it away, you are a glorified renter
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