This is only the Hong Kong business. Which is why it hasn't had the impact you would expect.
The Hong Kong business is the business.
Real estate giant China Evergrande will be liquidated
41–50 of 364 posts
Re: Real estate giant China Evergrande will be liquidated
#42Earlier quoted context omitted.
If you sell it for BTC, yes, though it's more likely people will get spooked of crypto and sell it for USD.
If USDT can no longer be redeemed for USD, then people may buy BTC instead?
Why would someone accept your USDT and give you bitcoin if USDT is de-pegged and worthless?
Re: Real estate giant China Evergrande will be liquidated
#43That's going to be a tough liquidation. Who wants to buy a half-finished building abandoned during construction due to lack of a market? Such things have negative value.
Re: Real estate giant China Evergrande will be liquidated
#44Earlier quoted context omitted.
That kind of thing has usually had the opposite effect. If USDT is worthless then you want to sell it, causing the price of Bitcoin to rise on those exchanges.
If you sell it for BTC, yes, though it's more likely people will get spooked of crypto and sell it for USD.
Isn't the point of USDT that the vast majority of its holders are locked out of USD? They can liquidate to BTC but it is unclear that they can actually get USD out.
Re: Real estate giant China Evergrande will be liquidated
#45Earlier quoted context omitted.
If USDT can no longer be redeemed for USD, then people may buy BTC instead?
Why would someone accept your USDT and give you bitcoin if USDT is de-pegged and worthless?
De-pegged is just any value less than $1. If USDT is 50% collateralized, maybe it is worth $0.50, which is de-pegged but not worthless.
Re: Real estate giant China Evergrande will be liquidated
#46That's going to be a tough liquidation. Who wants to buy a half-finished building abandoned during construction due to lack of a market? Such things have negative value.
Wait until buyers stop making mortgage payments on half completed units.
Re: Real estate giant China Evergrande will be liquidated
#47Earlier quoted context omitted.
What's the mechanism?
It was suspected that a lot of USDT is backed by Evergrande notes, though they have denied it. Evergrande liquidation may cause a USDT liquidation and cause USDT to lose peg. There are often idiots that will drag the rest of crypto including bitcoin with it, though.
USDT is the 25th largest holder of T-bills. This is a bit of bullshit fud.
Re: Real estate giant China Evergrande will be liquidated
#48Earlier quoted context omitted.
If you sell it for BTC, yes, though it's more likely people will get spooked of crypto and sell it for USD.
Isn't the point of USDT that the vast majority of its holders are locked out of USD? They can liquidate to BTC but it is unclear that they can actually get USD out.
It would be nice if the market worked that way and every coin helped each other out as a "crypto team" to beat out fiat together, but the reality is BTC holders are probably going to be spooked and not give you much BTC for your USDT.
And then everyone gets spooked of crypto as a whole and sells for fiat.
Basically whenever "shit" happens all of crypto goes down.
Re: Real estate giant China Evergrande will be liquidated
#49A couple of things to note:
1.) Why did it take Evergrande 3 years to liquidate? In western countries, liquidation happens in a few months. One should note that Evergrande did not get that big by itself; obviously it had the support of CCP elites to secure huge bank loans. Therefore, when it went bankrupt, the delay was to allow these elites to pull money/liquidable assets out of Evergrande. Thus after 3 years, Evergrande probably has pretty bad mark-to-fantasy assets left. This bodes very ill for creditors. Foreign creditors account only for $25B of the $300B liabilities for Evergrande. https://apnews.com/article/china-evergrande-property-liquida...
2.) This event implies that most of the Chinese real estate developers are bankrupt/insolvent. excluding for Li Ka Shing's portfolio most likely.
3.) Evergrande's assets are mostly comprised of lands in China. This means, most of the lands will get returned to local governments, which will increase land inventory massively. This will accelerate the real estate price decline in all parts of China, on top of the 30-40% drop we're seeing in Tier 1 cities, on top of the 50-60% drop we're seeing in non-Tier 1 cities.
4.) What does this mean for China's 3 pillars of economic engine (real estate, consumer spending, export)? real estate comprises of 25-30% of Chinese economy, so the economy will be forced to mark to reality these assets, and will take a huge hit. Consumer spending is tied to real estate engine, since most of the citizens' wealth is in real estate. Thus we are seeing consumer spending decline and downgrade substitution patterns. Case in point: recent $1 McDonald burger deal was causing shortages in China. Haidilao has been focused on a cheaper version of their hot pot, which costs $10. $1 bread shops are spreading across China.
5.) If real estate and consumer spending is crashing, then China can only rely on export, and thus the trend of dumping abroad will continue. Especially cars and solar. Europe is in the middle of looking into applying tariffs to Chinese EVs. US is already set with heavy tariffs on Chinese EVs. Note that Chinese export to US and Europe has dropped 10% and 20% y/y.
EDIT: also coincidently, Chinese authorities just banned short selling https://www.reuters.com/world/china/china-securities-regulat.... This is following the Chinese stock market decline of 11% this year. and 3 year cumulative decline.
Re: Real estate giant China Evergrande will be liquidated
#50That's going to be a tough liquidation. Who wants to buy a half-finished building abandoned during construction due to lack of a market? Such things have negative value.
Wait until buyers stop making mortgage payments on half completed units.
And the reserve requirements of banks were just lowered to help spur growth:
https://www.reuters.com/world/china/china-will-cut-banks-res...