Major Chinese company facing possible collapse

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Brictoria
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06 Oct 2021, 3:30 am

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As Evergrande lurches closer to collapse, a second debt-riddled Chinese property developer is now facing its own crisis, with experts fearing a contagion may now be upon us.

Evergrande, the world’s most indebted real estate company, is facing ruin as it struggles to repay its staggering $A408 billion debts.

The company’s potential collapse would be so huge there have been widespread concerns it could end up being China’s “Lehman moment” – a reference to concerns it could trigger a worldwide financial crisis and spark a “contagion” by affecting other companies and sectors.

Now, it appears that grim prediction might be coming to pass, with a second major Chinese real estate firm ailing.

Fantasia

Founded in Shenzhen in 1996 by the niece of a former Chinese vice-president, Fantasia Holdings Group Company Limited is another leading Chinese property developer.

The company boasts five arms, including property development, property investment, property operation services, property agency services and hotel services, with other operations including tourism, entertainment and interior design services.

In other words, it’s not exactly a minor player.

But this week, Fantasia missed a payment on a $US206 million ($A282 million) bond that had matured the day before, triggering a default.

It came as property management firm Country Garden Services Holdings said that a unit of Fantasia had missed repayment on a 700 million yuan ($A108 million) loan, saying it was likely the company would default.

In a stock exchange filing, the company said it was is now assessing “the potential impact on the financial condition and cash position of the group”.

Just weeks earlier, the firm had insisted it had “no liquidity issue”.

And in a third blow to China’s struggling real estate sector, another firm, Sinic Holdings, also defaulted on a debt interest repayment this week, with Fitch ratings downgrading Sinic as a result.

Source: https://www.news.com.au/finance/markets/world-markets/second-chinese-property-developer-fantasia-defaults-amid-evergrande-fiasco/news-story/11209d0bf8e53209ceca005b11c19545



Nades
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06 Oct 2021, 1:11 pm

It makes you wonder why on earth property investing is so huge in China when entire new build housing estates are completely empty and their population is about to plummet.



Brictoria
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20 Oct 2021, 9:59 pm

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Its been teetering on the brink of collapse for weeks but China Evergrande, the country’s second biggest property developer, could be facing up to doomsday as it admitted it may not be able to meet its financial obligations.

With more than $A400 billion in debts, the property developer is dealing with several looming deadlines to pay up, as attempts to save it fall through.

An offshore bond payment that China Evergrande initially missed on September 23, but got a 30-day grace period on, is set to expire on Saturday with $110 million owing.

There’s another $60 million interest payment too, which wasn’t paid when due on September 29, and the grace period is also set to run out.

Discussions for a $A7 billion deal for Hong Kong-listed Chinese developer Hopson to take a majority stake has also fallen through.

Credit rating service Moody’s has basically given the property developer a junk rating, warning that there are “weak recovery prospects for Evergrande’s creditors if there is a default”.

Experts believe that China Evergrande’s collapse is all but inevitable.

The Chinese government has been reluctant to bail out the ailing property developer and the People’s Bank of China governor Yi Gang has claimed the risk to the economy could be contained.

Yet there are 70,000 investors in Evergrande, which has also paused construction on homes for more than 1 million home buyers.

[...]

Situation continues to unravel

Mr Bennett added that China, the world’s second largest economy, could well be having a US style property speculation bubble burst experience.

“In the original GFC, high lending to all kinds of construction and property investment (in the US) lead to a global financial crisis. China was actually the backstay then to the global economy,” he noted.

He added that China’s continued strong growth during the GFC and the impact that had on all of Asia and Australia, certainly supported the region during the severe USA and European downturn.

So China’s potential downturn could spell bad news for Australia considering it makes billions from the relationship, despite the trade relationships being frosty at times.

To add to that the US economy is in the grip of a serious slow down with US mortgage applications suffered another severe contraction, he added.

“We should pay attention to any further decline in Chinese property prices, and be particularly concerned should the boom in US prices begin at any stage to slow or reverse,” he said. “Mortgage applications, are as I have said for some time, a major warning sign.”

Source: https://www.news.com.au/finance/economy/world-economy/china-evergrande-set-to-collapse-potentially-causing-usstyle-gfc/news-story/b55e3aad71c50ea6a733d664f4943d98



Pepe
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20 Oct 2021, 10:51 pm

Nades wrote:
It makes you wonder why on earth property investing is so huge in China when entire new build housing estates are completely empty and their population is about to plummet.


Xi is a hopeless economist. :mrgreen:



Pepe
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20 Oct 2021, 11:06 pm

Brictoria wrote:
Quote:
Its been teetering on the brink of collapse for weeks but China Evergrande, the country’s second biggest property developer, could be facing up to doomsday as it admitted it may not be able to meet its financial obligations.

With more than $A400 billion in debts, the property developer is dealing with several looming deadlines to pay up, as attempts to save it fall through.

An offshore bond payment that China Evergrande initially missed on September 23, but got a 30-day grace period on, is set to expire on Saturday with $110 million owing.

There’s another $60 million interest payment too, which wasn’t paid when due on September 29, and the grace period is also set to run out.

Discussions for a $A7 billion deal for Hong Kong-listed Chinese developer Hopson to take a majority stake has also fallen through.

Credit rating service Moody’s has basically given the property developer a junk rating, warning that there are “weak recovery prospects for Evergrande’s creditors if there is a default”.

Experts believe that China Evergrande’s collapse is all but inevitable.

The Chinese government has been reluctant to bail out the ailing property developer and the People’s Bank of China governor Yi Gang has claimed the risk to the economy could be contained.

Yet there are 70,000 investors in Evergrande, which has also paused construction on homes for more than 1 million home buyers.

[...]

Situation continues to unravel

Mr Bennett added that China, the world’s second largest economy, could well be having a US style property speculation bubble burst experience.

“In the original GFC, high lending to all kinds of construction and property investment (in the US) lead to a global financial crisis. China was actually the backstay then to the global economy,” he noted.

He added that China’s continued strong growth during the GFC and the impact that had on all of Asia and Australia, certainly supported the region during the severe USA and European downturn.

So China’s potential downturn could spell bad news for Australia considering it makes billions from the relationship, despite the trade relationships being frosty at times.

To add to that the US economy is in the grip of a serious slow down with US mortgage applications suffered another severe contraction, he added.

“We should pay attention to any further decline in Chinese property prices, and be particularly concerned should the boom in US prices begin at any stage to slow or reverse,” he said. “Mortgage applications, are as I have said for some time, a major warning sign.”

Source: https://www.news.com.au/finance/economy/world-economy/china-evergrande-set-to-collapse-potentially-causing-usstyle-gfc/news-story/b55e3aad71c50ea6a733d664f4943d98


Frosty "at times"?
Who is this turkey?
Chinese/Australian relations are abysmal. 8O

And it ain't getting any better now Australia has given another broadside over China's despicable behaviour regarding trade delinquency, recently. 8O



SkinnedWolf
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13 Jun 2022, 9:04 am

Pepe wrote:
We are talking about an aggressive jingoistic government here that spends massive amounts on its military.

Military expenditure (% of general government expenditure) 2020
Quote:
Belarus 30.8
...
Russian Federation 11.4
Singapore 11.3
Korea, Rep. 10.9
...
India 9.1
...
United States 7.9
Turkey 7.5
...
China 4.7
Australia 4.6


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