Evergrande teeters on edge of default as $148M payment falls due • Hacker News Board

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

#331

Post by fspeech » Thu, Nov 11, 2021, 5:18 AM UTC

Specie33 wrote: post #26

Interesting about this is that Evergrande is defaulting only on foreign held debt. Not internal debt after a ccp mandate. If their economy continues its downturn then this precedent would hold for all debt. I would really watch personal funds and investments and insure they dont hold any chinese debt as an asset.

Clearing firm Clearstream said all coupons were paid. It is insteresting how little patience people have. There is an authoritative source here. People could just wait for a few more hours for it: https://news.yahoo.com/evergrande-makes-overdue-interest-pay...

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

#332

Post by seanmcdirmid » Thu, Nov 11, 2021, 5:19 AM UTC

vkou wrote: post #156

thereddaikon wrote: post #117

There has been talk for years about China's wild construction programs, creating entire cities that nobody lives in. It was obviously unsustainable. Could it be finally falling apart?

China builds housing in advance of demand. In the United States, we fail to build housing even in the face of demand. There's pros and cons to either system, but so far, the demand has largely arrived. The ghost cities of 2010 are now bustling metropolises. The ghost cities of 2020... Are on track to become bustling metropolises. China has added ~500 million people to its cities over the past 50 years. 'Build in anti…

> The ghost cities of 2010 are now bustling metropolises. The ghost cities of 2020... Are on track to become bustling metropolises.

That really isn't true. Kangbashi (a district of Ordos in Inner Mongolia) is still pretty empty for the amount of infrastructure they've built. They "lowered" their population target and claimed success, and are trying to get people to move there by putting in a good school, but you can still go there to see empty boulevards.

Likewise, China's tallest building is an incomplete skyscraper in Tianjin that hasn't had any work done on it since 2015. Tianjin also overbuilt on a new financial district that no one is really interested in.

Many of these overbuilt buildings are never going to be lived in before they are torn down. They just aren't in very convenient locations (e.g. not enough jobs to sustain those areas and no one wants to commute in traffic to where their are jobs).

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

#333

Post by seanmcdirmid » Thu, Nov 11, 2021, 5:20 AM UTC

whimsicalism wrote: post #245

thereddaikon wrote: post #209

Earlier quoted context omitted.

As long as you can make sure they don't rot before people move in. There are pros and cons to both approaches and I have personally seen the downsides to not building enough housing. We also allow far too much speculation on residential real estate in the US for my liking. People's livelihoods shouldn't be traded commodities.

You need speculation to send price signals to the housing producers. Speculation without any building is the problem. Speculators blocking new building is also a problem.

China also lacks a property tax so speculation is much more viable than in the west (where you have to pay property tax on a house if it is lived in or not).

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

#334

Post by fer » Thu, Nov 11, 2021, 5:41 AM UTC

blihp wrote: post #304

JamisonM wrote: post #280

Earlier quoted context omitted.

Absolutely crazy that the top comment on this story is a "USD short squeeze" idea after 5 hours. These amounts, 200 million, 150 million USD.. this is peanuts, a fart in the wind. PROTIP: Anyone like Lyn Alden that is offering premium stock tips is by definition a fraud, if you can beat the markets you just beat the markets and Scrooge McDuck-it, you don't run a damn newsletter.

That's a $150 million payment that they can't make. The concern is how are they going to make the future payments? Their total liabilities are on the order of $300 billion. Fantasia (mentioned in the story) is another China real estate developer in trouble. The concern is that this is the tip of the iceberg.

> Their total liabilities are on the order of $300 billion

~300 billion is the size of their debt (485 at the end of H1 2021). Their assets are at +2 trillion, +1 trillion in real estate alone.

Their problem is that with their current cash flow they can't pay their debt, ever, and now, they can't even keep up with the interest. But they're still in a position where selling off part of their inventory can offset the debt, and to my knowledge, that's what they've been trying to do.

That is, if their financial statements area real. That's the quid here, their position isn't particularly anomalous, but the market cap sits at 33 billion, very far from their declared assets, meaning the market doesn't believe those statements. Thats 60 to 1, where most REIT sit at around 2 to 1.

Their main problem is the large amount of unfinished homes (read: not producing any income) and you need money to fix that. My guess is that the government will step in to fix that point in particular.

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

#335

Post by greesil » Thu, Nov 11, 2021, 5:46 AM UTC

JamisonM wrote: post #280

pezzana wrote: post #103

> Shares of developer Fantasia Holdings (1777.HK) plunged 50% on Wednesday after it said there was no guarantee it would be able to meet its other financial obligations following a missed payment of $205.7 million due on Oct. 4. Watch the US bond market closely. Today saw a sharp selloff on the 10-year maturity, a favorite "asset" of foreign governments and companies. When those organizations get into trouble, they s…

Absolutely crazy that the top comment on this story is a "USD short squeeze" idea after 5 hours. These amounts, 200 million, 150 million USD.. this is peanuts, a fart in the wind. PROTIP: Anyone like Lyn Alden that is offering premium stock tips is by definition a fraud, if you can beat the markets you just beat the markets and Scrooge McDuck-it, you don't run a damn newsletter.

The fart before the storm, perhaps.

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

#336

Post by asdff » Thu, Nov 11, 2021, 5:58 AM UTC

roody15 wrote: post #307

whatever1 wrote: post #130

Earlier quoted context omitted.

The US can keep issuing dollars for as long as they like. And you will buy these pieces of paper because they are backed by the US Military, the US Air Force and the US Navy.

Are you sure? The US military doesn’t look to be at its peak. Despite its massive budget China’s military rise and the return of Russian military power might be changing the US’s role as the worlds only military super power. We may spend 10 times more than any other nation on our military … but due to bureaucracy and other inefficiencies our spending doesn’t quite get the same bang for its buck if you will.

US has spent the last 20 years testing technology in a real theater. China shoots at props in the desert. Russia can't afford to even play this game.

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

#337

Post by arcticbull » Thu, Nov 11, 2021, 6:03 AM UTC

tcgv wrote: post #317

dannyw wrote: post #313

Earlier quoted context omitted.

Nearly every single financial company (including JPM, Morgan Stanley, etc) offer premium stock tips through there analysts... Lyn Alden's site is a wealth of knowledge but I don't subscribe to any newsletters.

> Nearly every single financial company (including JPM, Morgan Stanley, etc) offer premium stock tips through there analysts... Well, they're expected to do that to maintain their stature as the "lighthouses" of the financial system

Not to mention, are they really doing it in good faith? Back in the GFC days, Goldman made headlines for just trading against their clients. Rather, I guess, for saying the quiet part out loud.

> Thomas Mazarakis, who heads Goldman’s fundamental strategies group, told select clients in an email that his unit often provided investment ideas that the firm had already traded on and the firm sometimes took the opposite approach, betting against particular instruments recommended by the group, the Times said.

> “We may trade, and may have existing positions, based on trading ideas before we have discussed those trading ideas with you,” the paper quoted Mazarakis as writing in the email. [1]

Would seem a good way to monetize your audience is to (a) get paid to (b) take positions and then (c) control the narrative around your positions - both publicly and to paying customers to gin the position up.

[1] https://www.reuters.com/article/us-goldmansachs-trades/goldm...

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

#338

Post by ButtSpark69 » Thu, Nov 11, 2021, 6:03 AM UTC

fer wrote: post #334

blihp wrote: post #304

Earlier quoted context omitted.

That's a $150 million payment that they can't make. The concern is how are they going to make the future payments? Their total liabilities are on the order of $300 billion. Fantasia (mentioned in the story) is another China real estate developer in trouble. The concern is that this is the tip of the iceberg.

> Their total liabilities are on the order of $300 billion ~300 billion is the size of their debt (485 at the end of H1 2021). Their assets are at +2 trillion, +1 trillion in real estate alone. Their problem is that with their current cash flow they can't pay their debt, ever, and now, they can't even keep up with the interest. But they're still in a position where selling off part of their inventory can offset the d…

How sure are you their assets are really worth 2T? Isn't that a lot of the question here?

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

#339

Post by justicezyx » Thu, Nov 11, 2021, 6:08 AM UTC

Zpalmtree wrote: post #321

justicezyx wrote: post #274

Earlier quoted context omitted.

At the moment like this, I always wonder: Should I spend time engaging with this guy who appears not reading, or cherrypicking statements, or plainly trolling?... I think the one sentence explanation is that your statement is plainly racism. Even in this post, you admitted that "This guy is under investigation", yet you are able to use a unsubstantiated charge, and blow it into China economic warfare, and label that…

Ah yes, anyone criticizing china is racist. Straight out of the CCP handbook.

WTF?

We are talking about a random US Chinese person, where did I defend CCP?!

WHAT KIND OF STUPIDITY IS NOW RAMPAGING ON HN!?

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

#340

Post by _xnmw » Thu, Nov 11, 2021, 6:15 AM UTC

shmatt wrote: post #72

_xnmw wrote: post #65

Earlier quoted context omitted.

A) Fight back by limiting Chinese expansion with US financial influence. Sanctions, etc. B) The US should do something, because if they don't, China will continue to take advantage of US ineptness. States have powers which investors simply don't have.

US government ineptness? Or US citizen ineptness. It's not the government buying this debt Now what, the government stops people from trying to make a quick buck on a high risk investments? We can start from stopping Americans from paying 7 figures for digital drawings of monkeys

> US government ineptness? Or US citizen ineptness. It's not the government buying this debt

You are focusing on this one type of transaction whereas the reality is that the Chinese state exercises influence in a lot of other areas where US investors have no control. Say, for, example using state-sponsored hacking and espionage to give an unfair advantage to their investors on the international free market. Something US investors could go to jail for if they tried to do. I repeat, if the US doesn’t fight for US investors interests, China will nonetheless fight for theirs.