Posted on 01/17/2022 5:18:47 AM PST by Browns Ultra Fan
The Chinese Real Estate Developer Debacles continues to spread from Evergrande to other developers as China’s Central Bank cuts rates due to Omicron spread.
First, China’s Central Bank cut their 1 year medium-term lending rate to 2.85% from 2.95%. And the growing malaise in China’s real estate development continues.
Fresh turmoil rocked Chinese property bonds on Monday on concern over the true scale of the industry’s hidden debts, deepening a selloff among higher-rated firms.
A Logan Group Co. note due 2023 sank 14.1 cents to a record low 62.9 cents after Debtwire reported the developer could be on the hook for $812 million of guarantees on outstanding obligations due through 2023. Country Garden Holdings Co.’s bond due 2024 tumbled 12.9 cents to 67.7 cents, extending last week’s selloff for the country’s biggest developer.
Let’s see if the US Federal Reserve follows through with it rates increases when China is cutting their rates.
(Excerpt) Read more at confoundedinterest.net ...
Somewhere in 2022, there’s a magnificent market drop coming, with a lot of Chinese banks holding mortgage situations about to fall apart. You put this with Covid problems and port issues...it just promises to be a fairly chaotic period for three or four months.
Don’t think they’ll have much choice. Every other central bank in the world has already raised rates.
A 0.1% interest-rate change?
(AKA 10 basis points)
You sow the wind you reap the whirlwind.
Chinese banks have under the direction of the Communist Central committee have allocated and squandered huge amounts of capital by make loans to fuel a huge urban construction boom. Also the economically non productive armed forces have consumed huge amounts of capital with procurements. Unfortunately these projects have not been profitable, nor have they made a credible return on investment. In fact many remain empty and are deteriorating before they were ever occupied. The banks have papered over the loans or there would be massive defaults. If anything interferes with Chinese exports and the intake of foreign capital in the form of hard currency and investment, the Chinese economy would soon collapse. The only way for China to control this situation and avoid a catastrophic inevitable collapse is a carefully planned bankruptcy proceeding on a nationwide basis.
“The only way for China to control this situation and avoid a catastrophic inevitable collapse is a carefully planned bankruptcy proceeding on a nationwide basis.”
Or, a Hail Mary war.
««shudder»»
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