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Evergrande: A DiscussionConcerns Investors May Have: China is said to contain more of the world's real estate assets than any other country. Therefore one concern is the potential impact a possible default may cause to international property markets. Consumer confidence in real estate investments could reduce and perhaps lower property demand, potentially reducing real estate prices. Should this occur to a great extent, pre-existing property loans could outvalue the revaluation of the real estate asset. This potential major contrast between loans outvaluing the associated properties could collapse some banks internationally. A possible mass sell-off of property globally by investors and banks could burst the property bubble. Another concern is investors could forfeit involvement in companies offering similar services. There ore other confounding factors involving the current pandemic, employment, inflation and among others. Thank you for reading. Please share your thoughts. Do you believe this company could be bailed-out or would other companies in a similar position expect similar treatment? ---- Disclaimer: This does not constitute any form of advice including legal, financial or investment advice and should not be construed or relied on as such. Always seek advice from a qualified and registered legal practitioner or financial or investment adviser. Information presented is for entertainment purposes only.
HKEX:3333
by calculations
Evergrande and the San Francisco Real-Estate Crash (ft. #Crypto)So while we wait for the #Evergrande thing to sort itself out, the city to pay attention to for cracks in the housing market here in the US is #SanFrancisco. They have had the highest housing inflation in the country over the last decade -- which is counteracted by the reality that both jobs and people are leaving the city in droves now due to its unaffordability, high taxes, and lower quality of living. So the part we should be concerned about is the fact that cash purchases of real-estate (the metric used to estimate foreign investment) has been on the rise for a while now, and COVID has more likely than not accelerated those trends. Of the possible 30-40% of homes bought with cash in SF, we know that at least with foreign properties, more than 70% of them are from China. We don't have the exact numbers yet but I think it's safe to say that it's probably enough to have an impact. While everyday Americans struggle to make ends meet, why does the market keep on going up, at least on paper? The reality is that US markets are being propped up by foreign speculators right now, rather than anything we did on our end. Foreign investors know that Americans are homeownership obsessed and will basically do anything to keep their home values up, no matter what the cost. (Homelessness, crime, rising rents, etc.) They don't live with the consequences since most aren't even here -- all they really care about is getting a return. Both the NIMBYs and politicians in the US have sold out the American people to see their home values rise for a few % points -- foreign investors are basically trying to #buythedip of our dysfunction and laughing all the way to the bank, really. Is the sky going to fall? No. But when you see people freak out over changes in 5-10% even in assets like #crypto, a change like that can actually be panic-inducing in traditional markets. Imagine that your investment that has gone up steadily every year for 50 years, now going down. If you're a renter or a prospective homebuyer, this may be the moment you've been waiting for, though. Something worth keeping tabs on, either way.
HKEX:3333Long
by RyanTanaka
Future for TencentFirst question is what is your holding period? If you look to invest for more than 6 months to a year, then good to build your first position in Tencent at current price and we might see 7xx in future (unknown timeline) . However, if you are trading for quick profit, the current price will most probably ranging within $100 before any significant move can happen as market starts to consolidate. Meanwhile, you could spend your fund on other active stock to make money instead of sitting in tencent till the chart has started to show sign of reversal. Not recommend to trade, but recommend for hold for long term at current price.
HKEX:700
by 100dollar
A potential multibagger 3X to 5xWith a strong performance in Aluminium, Rusal will start to move out of long term downtrend. Price of Rusal has tested the based 3 times and poise for a potential breakout with a immediate resistance at $7. Rusal tend to have the strongest performance between April in the past and tend to fall sharply in Jan. If price can break out and retest $6 , we expect it to grow towards $10 and follow by $13 by end of year With an estimate to be $24 to $36.
HKEX:486Long
by 100dollar
Going directly into Coal in ChinaWith a exploding coal price, caused by gas price and shortage from russia, this stock looks very cheap. Since it is a china stock, it suffered with no real reason by the last issues on real estate and tech crisis in china, but this company mining coal and deliver power to the chinese economy. Seeing a explosion of the price in coal: tradingeconomics.com This is a sure buy, if you have direct possibility to trade in china. The stock is currently under book value and insitric value, a lot with a dividend yield about 12.5% in the past and may surly rise in the future because they can make a lot more profit on coal in the second past of the year and in winter 2021/2022, because of lacking of natural gas from russia. www.reuters.com Europe is surly more willing paying higher prices on natural gas, than china, because greenhouse is not a big deal in china, but only in europe.
HKEX:1088Long
by smoki99
3333Evergrande Recovery Setup - The Trade of 2021 stops below 11-year-lows , targeting Full Recovery. Accumulate within reason, probably the trade of 2021 Thought Process : 1. Major Fear Stage in the markets, Rapid Imbalance Recovery needed to regulate market cycles. (people crying all over headlines, great time to accumulate) 2. Fundamentals intact (employee data, earnings data etc.) 3. Very Probable bailout, chances of Evergrande going bankrupt are neutral for now 4. Major Demand Accumulation Zone for smart money
HKEX:3333Long
by raysontan
The Evergrande Crisis ExplainedIn this post, I'll be providing an easy yet comprehensive explanation on the Evergrande crisis, and why it's important for us to understand the situation. Disclaimer: This is not investment advice. This is for educational and entertainment purposes only. I am not responsible for the profits or loss generated from your investments. Trade and invest at your own risk. What is Evergrande? - Evergrande is China’s second largest property developer, founded in 1996. - To understand the size of this company, here are some numbers: - Evergrande is running more than 1300 projects in over 280 cities. - They’ve had success with real estate, so they also expanded horizontally, acquiring an electric vehicle company as well as Guangzhou F.C. - They own a lot of other smaller companies, but their main focus and main business is in the field of real estate. The Problem with Evergrande - The main problem with Evergrande is its liabilities. - The only thing you need to understand is that the company is in a lot of debt - specifically, $310 Billion. - The company is also going through hard times with insolvency issues, and underperformance in terms of revenue. - When the Chinese government put a list of companies that could pose a threat to the market and lead to its collapse, Evergrande was also on the list - It was also recently revealed they begged the government for help in their backdoor listing plan as well. Evergrande's Stock and Bond Prices - Overall, Evergrande's stock fell close to 90% from its all time high levels, and over 80% since the beginning of this year - The company’s dollar bond’s price has also dropped over 70%. - What’s also concerning is how the bonds of Evergrande’s real estate counterparts are also dropping sharply, and signaling a potential crash. Evergrande's Debt - Out of Evergrande’s $310B debt, about $85B comes from bonds and loans from banks. - These are the liabilities for which Evergrande actually pays interest on. - $67B comes from shadow banking systems; money from shady sources. - The rest of the $158B is actually the most important part. This is the amount of accounts payable. - When Evergrande is does business and they’re developing real estate, they need to buy the materials and resources needed. - But when they bought whatever they needed from their suppliers, they didn’t pay in cash. - It all went down as accounts payable, which basically means that they owe the suppliers money. The Anatomy of a Market Crash - Financial institutions and suppliers rely heavily on Evergrande, and a lot of companies could go bankrupt if they’re not paid. - This is essentially a domino effect of the entire Chinese market, with Evergrande at the center of it. - Not only that, we also need to think of Evergrande’s employees. - The company has over 123,000 employees alone, and that doesn’t include the number of construction workers who are hired for each of their projects. China's Real Estate Market Situation - China's real estate market is the biggest in the world - The market also accounts for 10% of China's entire economy. - Taking this into consideration, a complete collapse would cause devastating repercussions to not only the Chinese economy, but also the stability of the CCP, and the global economy as well. Why the Chinese Government is Capable of Bailing Evergrande Out - If we take a look at the numbers, it could also be said that they might get a government bailout. - While their liability amounts to $310B, the interest they actually need to pay imminently, amounts to $669m - This is also still a lot of money, but much more manageable than $310B. - So while Evergrande is having a hard time with insolvency, if the government were to help out just a little bit, they might just be able to get back on their feet. - And with investors gathering up in front of the Evergrande building and the probability of a political risk increasing, $669m might be a small sacrifice for the stability of the regime. China's Indirect Intervention - The Global Times, a media that directly reflects the stance, position, and opinion of the Chinese government, said that Evergrande was "not too big to fail". - But, China’s central bank injected $14B in cash in Sep. 17, and another $15B today through Open Market Operations (OMO). - And since the liquidity they provided was the most they’ve done in the past 8 months, it’s safe to say that they had Evergrande in mind Expert Opinion on the Matter - Michael Burry, founder of Scion Capital LLC, shared a tweet by @INArteCarloDoss, who states some important points. - The 3 redlines, which are the debt related restrictions, began last year. - China has been lifting the real estate market by leveraging a lot of debt, and the government wants to deleverage. - It’s almost certain that Evergrande’s bankruptcy is a matter of time, but the question is how severely other companies and financial institutions will be affected. - Of course the Chinese government will provide liquidity in the market, but won’t directly intervene and solve the problem for Evergrande. - Overall, it could be said that Michael Burry agrees with this thread that says Evergrande’s bankruptcy is inevitable, and that the Chinese government will indirectly intervene, if it does decide to intervene at all. - So a crisis in some form will certainly take place, it’s a matter of the degree to which it takes place. - On the other hand, we have @BaldingsWorld - Christopher Balding is a professor at Peking University - His logic is that we won’t see a financial crisis because we’re applying the logic of the free market to a country’s market that is actually completely under control of its government. - So this professor believes that a bailout for Evergrande is inevitable. How to Prepare for a Potential Crash - Since nothing is set in stone yet, the best we can do as investors is to keep my eyes open and look at how the Chinese government might directly or indirectly solve the issue. - Depending on how the situation deteriorates, increasing one's cash holdings might be prudent in case the US stock market also is affected. - This is especially important as the S&P500 index is currently testing the 60 Simple Moving Average (SMA) on the daily. (chart below) Conclusion Evergrande's debt situation might have greater implications than we can anticipate. Regardless of whether the Chinese government intervenes or not, and whether it does in an indirect or direct manner, there will be repercussions to the Chinese economy. As such, it's important to keep an eye on how the situation may unfold and affect the US stock market as well. If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
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HKEX:3333
by Michael_Wang_Official
121
Evergrande and the Cryptocurrency Market Selloff ExplainedIn this post, I'll be providing an explanation on a theory regarding the potential connection between China's giant real estate developer, Evergrande, and Tether. If you aren't familiar with Evergrande and the crisis it's currently going through, make sure to check out my previous post below: Disclaimer: This is not investment advice. This is for educational and entertainment purposes only. I am not responsible for the profits or loss generated from your investments. Trade and invest at your own risk. Evergrande's Shadow Banking Funds - In my previous analysis, I mentioned the existence of Evergrande's $67B liability from shady sources. - People, including renowned investors like Michael Burry, are posing doubts as to whether this liability has connections with Tether, a company that offers stablecoins in the cryptocurrency market. About Tether - Tether offers $USDT, a stablecoin that is convertable for 1 USD. - Essentially, what it does is not so different from what banks used to do, and continue to do today. - During the gold standard, when you took $500 to the bank, they'd give you an ounce of gold. - Tether guarantees that they'll provide 1 USD per 1 USDT - But, some say that Tether is faced with a bank-run like situation, looking at its reserves. - According to their March 2021 Reserves update, commercial paper accounts for 65% of Tether's cash reserves. - For those of you who don't know, commercial paper, or CP, is a way to finance extremely short term loans at a very cheap rate. - Tether did not disclose whose CPs they were, in order to protect their partner's privacy. Tether's Commercial Paper - Back in July this year, Tether’s CTO and general counsel had an interview with CNBC, and made a few important points. - They said that they have about $30B in AA rated International Commercial Paper, and these were rated AA by S&P and Fitch. - The point that some people are making is that Tether’s commercial paper might actually be Evergrande’s commercial paper. - This may seem like a conspiracy theory, but there are certain points that line up. Reason #1 - First, Tether currently has $30B in commercial papers, and that’s an insane amount of money. - Reuters reported that Shengjing Bank, the bank affiliated with Evergrande, is under investigation for providing illegal loans up to $20B. - Considering that even a more renowned company like JP Morgan can’t write $20B loans, there is plausible reason to doubt that the capital may have come from Tether. - So taking into consideration the size of the loan, some say that it’s highly likely that the capital flowed into Chinese real estate companies. Reason #2 - Secondly, even after Bitcoin peaked in mid April, Tether continued to print more USDT. To be precise, they printed $15B between mid April and early June. - In case you don’t know what bitcoin has to do with this, there have been claims that Tether has been arbitrarily printing USDT. - This USDT would be used to manipulate the price of Bitcoin, and the overall cryptocurrency market in general. - While Tether has been printing money like crazy, and as soon as Evergrande CPs defaulted on June 7, they stopped printing USDT. - Now this is a chicken or egg question where we don’t know if Evergrande’s liquidity problem caused Tether’s collateral to impair, or whether Tether’s cutoff caused the liquidity issues at Evergrande, but something sure smells fishy. How the Market Structure Would Break - Tether claims that they don’t hold any Evergrande commercial papers, but we don’t know anything for sure yet. - If it turns out that Tether was lying, and we see a domino effect take place, it would look something like this: - Evergrande, along with other real estate developers in China, would go default. - Tether, who lent them money in the form of commercial paper, could also go default. - And with tether going default we would see the cryptocurrency market take a huge hit. Where is Bitcoin Headed? - So at this point, you may be wondering: where would Bitcoin be headed with this absolute mayhem of a situation? - While Bitcoin and the overall crypto market crashed, we did manage to close above $40.7k on the daily. - This would indicate that the overall uptrend remains intact, despite the awful news. Conclusion So many answers still remain unanswered. Where does Tether put its billions? Who issues $30B in AA International Commercial paper, willing to pay anything? Why did Tether stop printing money as soon as Evergrande’s liquidity died? As I've said in the previous post, the best thing we can do as investors is to prepare for all probable situations. In my personal opinion, the Chinese government seems willing to indirectly solve the issue by injecting capital via open market operations, so it's more likely that this situation will be settled at one point, as opposed to leading to the entire global financial market collapsing. If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
HKEX:3333
by Michael_Wang_Official
17
Evergrand potential tremendous upside should they get bailed outThe Blue line is the actual chart 1week above and 1hr below. The green line is smaller cyclical chart taken from Feb 2015 to July of 2015 1hr chart below and extrapolated over the Larger current chart above. There are key markers in the chart that are clearly identifiable as a repeating and controlled stock. This stock should bounce after this bankruptcy deal as it will get bailed out or bought by someone else. Could easily see massive gains should this rebound like the past.
HKEX:3333Long
by parkair1501
Is Evergrande the next Lehman Brothers ??China`s economic model is based on real estate investment to drive growth. 20 Mil apartment buildings per year. China`s residential property is 20% of GDP every year. Too much! Real estate activities in China close to 30% of GDP every year. Huge! Chinese Government is Bashing the private sector, look at GOTU and BABA for example. Evergrande, second largest property developer in China has more than $300 billion in debt! Evergrande has $83.5 million interest payment Sept. 23 and a $42.5 million payment on Sept. 29 Failure to to pay in 30 days can put Evergrande in default. Today Evergrande has a Market Cap of 30.099B! At its peak, Evergrande was traded 13.5X higher! Evergrande’s potential debt blowup can send shock waves through financial markets! Today was just the beginning.
HKEX:3333Short
by TopgOptions
11