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Evergrande teeters on edge of default as $148M payment falls due

reuters.com

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Re: Evergrande teeters on edge of default as $148M payment falls due

#31

Post by WhisperingShiba »

chalst wrote: post #13
bingohbangoh wrote: post #10

So is this still "the next Lehman brothers"? Or have we moved on to something else?

It's Lehman-like in that I don't think China will be bailing anyone out. It's not Lehman-like in that the company isn't a tangled octopus in the middle of the financial system. Lots of investors exposed to developing markets will get burned, but I don't think the knock-on effects will be huge.

I think the complicating factor is that the Chinese housing market is where the people of China attempt to have savings.

A major housing market panic in China could create a lot of despair and unrest in China.

Re: Evergrande teeters on edge of default as $148M payment falls due

#32

Post by misterbwong »

christkv wrote: post #19
darkwater wrote: post #12

Can anyone ElI5 what this could potentially mean for the world economy?

Exposure to the international market is 19 billion USD so I'm guessing some funds will take a bad hit and will start legal proceedings. Bonds must have been junk for awhile now though so don't know who takes the hit. The unknown is the internal Chinese market side-effects. Depends on who holds the debt and if the government steps in to rescue it.

19B international exposure really doesn't seem like a lot, but, as you said, in the context of 300B total in liabilities. $279B is -a lot- for a Chinese market where the home ownership rate is almost 90% and non-primary home purchases account for ~70% of the housing purchases.

Re: Evergrande teeters on edge of default as $148M payment falls due

#33

Post by 01100011 »

mmastrac wrote: post #20

How much exposure does the Western world have to this? My guess would be "not much". It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here.

Hasn't Ray Dalio been advocating investing in China for a couple of years now? His thesis is that the US is a world power on the decline and China will soon rise to take its place. I wonder how that worked out for him and his fund?

Re: Evergrande teeters on edge of default as $148M payment falls due

#34

Post by noah_buddy »

gremlinsinc wrote: post #24

Here's to hoping for more big real estate investor defaults, maybe housing prices in the USA will drop from oversea investors offloading properties they can't afford the taxes on... (wishful thinking).

If property investment in China turns sour, where do you think those investors will go? At least some will invest in property in the US.

Re: Evergrande teeters on edge of default as $148M payment falls due

#35

Post by nwidynski »

dang wrote: post #28
polskibus wrote: post #3

original title is "Evergrande teeters on edge of default as $148 mln payment falls due". not exactly "defaults"

Yes - submitted title was "Evergrande defaults" and we've reverted it now. " Please use the original title, unless it is misleading or linkbait; don't editorialize. " https://news.ycombinator.com/newsguidelines.html

Just read this now, should've picked the DMSA link, but couldn't edit once posted. Thanks for updating though.

Re: Evergrande teeters on edge of default as $148M payment falls due

#36

Post by WhisperingShiba »

bsanr2 wrote: post #29
mmastrac wrote: post #20

How much exposure does the Western world have to this? My guess would be "not much". It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here.

A lot of people seem intent on letting us know that this is the case, at least.

The economy is held up by belief, and while I'm sure there are some good intentioned people telling us this, there are certainly some people who are using this as an opportunity to change financial positions.

Re: Evergrande teeters on edge of default as $148M payment falls due

#37

Post by Kye »

Some good explanatory threads I saved when the Evergrande news first broke a couple of months ago:

https://twitter.com/SahilBloom/status/1439920043404546050

https://twitter.com/FabiusMercurius/status/14392189567791513...

https://twitter.com/INArteCarloDoss/status/14389444317349191...

Re: Evergrande teeters on edge of default as $148M payment falls due

#38

Post by christkv »

misterbwong wrote: post #32
christkv wrote: post #19

Earlier quoted context omitted.

Exposure to the international market is 19 billion USD so I'm guessing some funds will take a bad hit and will start legal proceedings. Bonds must have been junk for awhile now though so don't know who takes the hit. The unknown is the internal Chinese market side-effects. Depends on who holds the debt and if the government steps in to rescue it.

19B international exposure really doesn't seem like a lot, but, as you said, in the context of 300B total in liabilities. $279B is -a lot- for a Chinese market where the home ownership rate is almost 90% and non-primary home purchases account for ~70% of the housing purchases.

"The financial fallout would be far reaching. Evergrande reportedly owes money to around 171 domestic banks and 121 other financial firms," the Economist Intelligence Unit's (EIU) Mattie Bekink told the BBC.

I would suspect the Chinese government will backstop the banks and firms but force consolidation and punish some people publicly.

Re: Evergrande teeters on edge of default as $148M payment falls due

#39

Post by LatteLazy »

mmastrac wrote: post #20

How much exposure does the Western world have to this? My guess would be "not much". It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here.

The CCP are in a similar position to the west: if they let one mega corp fail, others might, if others might maybe you need to re-evaluate your investments in all of China?

Here in the west we've just extended indefinite credit (13 years and counting). So it's a bit of a pivotal moment for the CCP imho. It might turn out they're more committed to markets than we are :)

Re: Evergrande teeters on edge of default as $148M payment falls due

#40

Post by ethbr0 »

misterbwong wrote: post #32
christkv wrote: post #19

Earlier quoted context omitted.

Exposure to the international market is 19 billion USD so I'm guessing some funds will take a bad hit and will start legal proceedings. Bonds must have been junk for awhile now though so don't know who takes the hit. The unknown is the internal Chinese market side-effects. Depends on who holds the debt and if the government steps in to rescue it.

19B international exposure really doesn't seem like a lot, but, as you said, in the context of 300B total in liabilities. $279B is -a lot- for a Chinese market where the home ownership rate is almost 90% and non-primary home purchases account for ~70% of the housing purchases.

Calling it now: Tether and a few other stablecoins explode.

Where other than China would you go to buy massive positions (face valued) of bonds, with continued room for expansion of your position, in private deals that you could keep quiet?

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