China"s property bubble may be about to burst

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It's one of Hemingway's best lines, from The Sun Also Rises.
"How did you go broke?" Bill asked.
"Two ways," said Mike. "Gradually and then suddenly."

It is a passage to which Xu Jiayin, founder of China Evergrande, China's biggest property group and the world's 122nd largest company by sales, can relate.

For most of this year, his firm has been floundering, fighting off hordes of angry creditors, defending court actions and desperately trying to secure enough finance to survive. Now the situation has taken a sudden turn for the worse.

At its peak, three years ago, the Hong Kong-listed China Evergrande was the world's most valuable real estate group. It's now better known as the world's most indebted property developer, owing more than $US300 billion ($403 billion).

Once a symbol of glittering success in the most exciting property market on the planet, China Evergrande is now tanking, and dragging many of its competitors with it, as global investors and creditors desperately attempt to parachute out of the troubled Chinese property sector.

Here

So how can I make money out of this info ? :)

Snap up some of their unsold apartments on the cheap. Preferably in one of those Chinese ghost cities. :bunny3:

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Originally Posted by Latindancer

So how can I make money out of this info ?

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short iron ore mining stocks

One of the problems of central-planning to keep a population 'employed' at all costs to keep them content and not think of how inadequate the government is, especially now that the Cultural Revolution 2.0 is starting and they're doing without panem et circenses

Lets see. Maybe Supreme leader Xi is about to fekk up a good thing, but maybe not. You certainly would not have gotten rich shorting China this century.

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Originally Posted by Latindancer

So how can I make money out of this info ? :)

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Have thought about doing this a year ago.

Buying Property in China as a Foreigner

What are the Requirements to Purchase Property in China as a Foreigner?

A foreigner must have studied or worked in China for at least one year before purchasing property there. A foreigner can only own one property in China, and that property must be residential.

There are additional requirements by province and city. For example, in Beijing, you must pay taxes and social security for at least five years before you are permitted to buy a property.

Or just get a HK Visa, and let the wheelers & dealers there sort y'out. :tumbs:

Certainly China Evergrande is on the ropes and if it collapses there will be a lot of collateral damage.

There are a lot of things going on in China, look at PH's thread on Xi's new cultural revolution. Also consider the somewhat fragile structure that many multinationals have employed to do business in China. The Variable Interest Entity (VIE), it is a sort of structure designed to get around some foreign investment restrictions that is tolerated but it is a device that could be very vulnerable to a stricter interpretation of the rules.

Then there is the thread reporting Soros's piece in the FT where he said:

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.

This part of what he wrote is fact, not opinion. There are millions of people in western countries who are invested in China through their pension schemes.

My point is not necessarily that the bubble will burst, rather that there are increasing political risks and the exposure of western investors is very great, so if something does go wrong then a lot of people are going to suffer.

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Originally Posted by panama hat

One of the problems of central-planning to keep a population 'employed' at all costs to keep them content and not think of how inadequate the government is, especially now that the Cultural Revolution 2.0 is starting and they're doing without panem et circenses

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You evidently don't know that China is on the same crony capitalist system that the west is on. The only price that is controlled is the price of money. Interest rates. They set their interest rates the same way the US does.

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Originally Posted by Shutree

Certainly China Evergrande is on the ropes and if it collapses there will be a lot of collateral damage.

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Oh certainly. Who's the US's biggest external creditor ? China. This unlimited debt spending the US does works when there's a billion suckers in China buying your debt.

It will be better in the long run for both countries after it all blows up though.

Yes its an old chart. But if you add Hong Kong or Taiwan to China's hoard, its still on top/

https://www.cepal.org/sites/default/...amp=1557350040

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Originally Posted by Backspin

You evidently don't know that China is on the same crony capitalist system that the west is on. The only price that is controlled is the price of money.

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Please, Skidmark. Not now

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Originally Posted by Shutree

This part of what he wrote is fact, not opinion. There are millions of people in western countries who are invested in China through their pension schemes.

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And that is a frightening prospect if either policies from or towards China change unilaterally. Limiting capital outflow would be catastrophic.

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Originally Posted by Shutree

if something does go wrong then a lot of people are going to suffer.

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Right, and that's outside China.

Inside China the totalitarian system will only continue to work if the population is kept at bay - how to keep them happy? Brute force which will eventually erode or keep them making money . . . which eventually leads to cries for freedom and we know how Beijing reacts

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Originally Posted by Shutree

Certainly China Evergrande is on the ropes and if it collapses there will be a lot of collateral damage.

There are a lot of things going on in China, look at PH's thread on Xi's new cultural revolution. Also consider the somewhat fragile structure that many multinationals have employed to do business in China. The Variable Interest Entity (VIE), it is a sort of structure designed to get around some foreign investment restrictions that is tolerated but it is a device that could be very vulnerable to a stricter interpretation of the rules.

Then there is the thread reporting Soros's piece in the FT where he said:

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.

This part of what he wrote is fact, not opinion. There are millions of people in western countries who are invested in China through their pension schemes.

My point is not necessarily that the bubble will burst, rather that there are increasing political risks and the exposure of western investors is very great, so if something does go wrong then a lot of people are going to suffer.

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It’s really not much different to the US treasury printing money, giving it to poor merkins to invest in that bastion of financial security, the US stock exchange.
Everything is fine when the indices rise but …….

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Originally Posted by panama hat

And that is a frightening prospect if either policies from or towards China and investment change

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We saw recently what Xi did to the private education sector in China. Never mind why he did it, even if he saw it as a positive move, he has at a stroke crippled a USD100 Billion industry. Something of a red flag. So to speak.

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Originally Posted by Shutree

We saw recently what Xi did to the private education sector in China. Never mind why he did it, even if he saw it as a positive move, he has at a stroke crippled a USD100 Billion industry. Something of a red flag. So to speak.

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A red flag? For who? For the population or for the "poor" owners?

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Originally Posted by Shutree

We saw recently what Xi did to the private education sector in China. Never mind why he did it, even if he saw it as a positive move, he has at a stroke crippled a USD100 Billion industry. Something of a red flag. So to speak.

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Yes, it was limited to those he can control and show the population who the boss is . . . when he tries that with foreign corporations China will suffer as no amount of propaganda can make up for lost jobs and poverty in the long term . . . and with the internet


A sensible discussion and then . . .

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Originally Posted by Klondyke

A red flag? For who? For the population or for the "poor" owners?

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Answer your own 'question'.

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Originally Posted by Klondyke

A red flag? For who? For the population or for the "poor" owners?

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The consumers of extra education were entirely Chinese citizens whose ambitions to study and prosper have been been dealt a blow. Most of the teachers were Chinese professionals, many are now unemployed. Many of the shareholders are Chinese citizens who are losing their investments. So in this particular case we can say that it is the Chinese population who are adversely affected.

So far as owners are concerned, I think you are ignoring the fact that many western pension schemes are invested in tracker funds which own stakes in some of the companies at risk. Those funds might be big, it does not mean that the pensioners themselves are rich. Many people could feel the fallout, if it comes. Those people might include you and me.

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Originally Posted by Klondyke

A red flag? For who? For the population or for the "poor" owners?

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Swallowing the anti capitalist propaganda

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Originally Posted by Saint Willy

Swallowing the anti capitalist propaganda

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He helped write it while enjoying its offerings

Year after year I've been reading warnings of China's property bubble's need to burst, but prices keep going up, and the people I know in China are as eager as ever to upgrade their living conditions and/or buy a condo in one of the big cities. Despite what's happening with big developers, I think property prices and demand will stay strong for a long time to come.

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Originally Posted by Shutree

The consumers of extra education were entirely Chinese citizens whose ambitions to study and prosper have been been dealt a blow. Most of the teachers were Chinese professionals, many are now unemployed. Many of the shareholders are Chinese citizens who are losing their investments. So in this particular case we can say that it is the Chinese population who are adversely affected.

So far as owners are concerned, I think you are ignoring the fact that many western pension schemes are invested in tracker funds which own stakes in some of the companies at risk. Those funds might be big, it does not mean that the pensioners themselves are rich. Many people could feel the fallout, if it comes. Those people might include you and me.

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The Chinese government is trying to address the issue of education institutes raping people blind by manipulating parents into charging huge tuition's for questionable value.

And China isn't concerned about disturbing a bubble. In this case, the education bubble. We have the same thing in the west

China's Crackdown on Tutoring Schools: Concerned Parents and Teachers on Weibo | What's on Weibo

One of the reasons that is mentioned in Chinese media for the crackdown on after-school tutoring is that educational companies were putting profits above anything else, and were feeding off parents’ anxiety while increasing the pressure on children to drive their business.

Most Chinese parents are willing to invest a large amount of money in their children’s education, as they generally fear that their children will be left behind if they don’t. The ubiquitous advertising of after-school tutoring agencies and their cunning marketing strategies have also exacerbated parents’ anxiety about their children’s future.
Since China’s new education policy emphasizes the responsibilities of regular schools, there are also those who worry about the increased pressure on teachers, of whom many have already voiced concerns about the excessive workloads and unrealistic expectations of parents.

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Originally Posted by Backspin

The Chinese government is trying to address the issue of education institutes

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It's a cultural issue, though, and no-one is being forced into sending their kids to these centres.

Same in Singapore and Malaysia and even now here in New Zealand. It's the drive to ensure their kids get into the best courses of the best universities and then the best jobs in the best companies or the government.

It ruins these young kids and yes, places a strain on their finances.

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Originally Posted by sabang

Chinese ghost cities.

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http://youtu.be/Ie6zd3Rwu4c?t=268

Noisy neighbours aren't gonna be a problem.

^Wondering why no people are shown. The China is famous with their under-population, isn't it? Did they all die already by Covid?

But what places they are showing, I too would not see any people:

-The skyscrapers, (nobody is on the windows and roof?)
-The lakes, nobody is swimming (isn't it frozen?)
-The construction sites behind the skyscrapers (no homeless around?)
-Behind the reporters on balcony (why nobody hanging or jumping from the higher levels?)
-And the Great Wall (why no people there in the wee hours?)
-Do they have in China also shopping malls and markets? (no see?)
-And why no people on the computer images of the City?

However, in a view of the current political situation Australia-China, it surely could be shown in much worse view, couldn't it?