The Business/Finance/Economics Thread | Page 28 | Vital Football

The Business/Finance/Economics Thread

More on the Evergrande collapse. It looks like foreign investors are getting 25c on the dollar. Evergrande have 1.4m units under construction.

There is no way this doesn't spark a property crash in China where property prices were already down 20%, causing Evergrande to default on their debts in the first place.

This is going to get very messy. I think this is the end of the Chinese "miracle".
 
I see there are protests at Evergrande HQ BB.

Reading here they only defaulted on 145MM of the 300B they are liable for. I am seeing comments say when Lehman went down they defaulted on 60B of 600B.

Could be the first domino though.
 
CDX_EIRE said:
I see there are protests at Evergrande HQ BB.

Reading here they only defaulted on 145MM of the 300B they are liable for. I am seeing comments say when Lehman went down they defaulted on 60B of 600B.

Could be the first domino though.
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I suspect that Chinese firms are going to find it very difficult to get USD loans after this. They are not going to be able to pay their loans that come due if they can't borrow more money.

The tide is going out. Let's see who has been skinny dipping.
 
I haven’t bought many shares lately, but I’m sticking a punt on TUI (unless someone tells me I’m mad) - biggest package holiday operator across Europe. They have had the backing of the German government and have raised capital to see them through the winter from what I’m reading, I have no doubt personal holidays will rebound and rebound higher than the level they got to with business travel reducing. The hotels in Greece and Spain need them to bring the demand, so they’re in a good place to rebound I would say.

I was looking at wizz air but their share price seems to have built in all that recovery.

Share price today is £3.
 
danvilla2 said:
I haven’t bought many shares lately, but I’m sticking a punt on TUI (unless someone tells me I’m mad) - biggest package holiday operator across Europe. They have had the backing of the German government and have raised capital to see them through the winter from what I’m reading, I have no doubt personal holidays will rebound and rebound higher than the level they got to with business travel reducing. The hotels in Greece and Spain need them to bring the demand, so they’re in a good place to rebound I would say.

I was looking at wizz air but their share price seems to have built in all that recovery.

Share price today is £3.
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That seems like a good investment. What's the general consensus on holidays where you are?

The gambling stocks all took a beating on the Chinese government sabre rattling over Macau. The analysts seem to think it's all bluster but Wynn lost 20%. It's worth keeping an eye on those stocks.
 
BodyButter said:
That seems like a good investment. What's the general consensus on holidays where you are?

The gambling stocks all took a beating on the Chinese government sabre rattling over Macau. The analysts seem to think it's all bluster but Wynn lost 20%. It's worth keeping an eye on those stocks.
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U.K. have scrapped the amber list, so it’s more of a go or don’t go approach to travel. Furlough is coming to an end, so that’ll be a challenge for companies to get through the winter and into spring.

Younger couples are travelling from my personal experience and families willing to take more of a risk. We’re aiming to go away at Xmas, but holding off booking as it will have been over 20 months or so since I went on a plane which seems pretty extraordinary.

Next spring and summer will be the strong rebound, winter will be just ticking over.
 
danvilla2 said:
U.K. have scrapped the amber list, so it’s more of a go or don’t go approach to travel. Furlough is coming to an end, so that’ll be a challenge for companies to get through the winter and into spring.

Younger couples are travelling from my personal experience and families willing to take more of a risk. We’re aiming to go away at Xmas, but holding off booking as it will have been over 20 months or so since I went on a plane which seems pretty extraordinary.

Next spring and summer will be the strong rebound, winter will be just ticking over.
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They have opened up one of the tourist islands here but you have to fly there. I really don't fancy being crammed into a plane with hundreds of strangers. I guess it will take a while to get used to being in close proximity to other people.
 
BodyButter said:
They have opened up one of the tourist islands here but you have to fly there. I really don't fancy being crammed into a plane with hundreds of strangers. I guess it will take a while to get used to being in close proximity to other people.
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I guess there’s enough people willing to be crammed next to someone for it to be economical enough to fly! The trains here are busy again, so it’s no different to that - probably less safe on a train as the air someone breathes out you breathe in without it being filtered
 
danvilla2 said:
I guess there’s enough people willing to be crammed next to someone for it to be economical enough to fly! The trains here are busy again, so it’s no different to that - probably less safe on a train as the air someone breathes out you breathe in without it being filtered
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Flights to that island are at 100% capacity.
 
I've been lucky in that the flights I've had to take lately have been at less than 50% capacity.
 
BodyButter said:
That seems like a good investment. What's the general consensus on holidays where you are?

The gambling stocks all took a beating on the Chinese government sabre rattling over Macau. The analysts seem to think it's all bluster but Wynn lost 20%. It's worth keeping an eye on those stocks.
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I got so lucky I sold that a few weeks ago and got Caesars, also saw that LVS who also took a hit dont have as much interest in China. I believe they have a lot of properties in the likes of Thailand.
 
More juicy Evergrande gossip:

They were declaring property which they had already sold but hadn't completed yet as assets allowing them to borrow way more than they should have been able to.

They have never written down any land or projects which went bad, further inflating their assets.

They have borrowed from more than 200 banks and financial institutions, most of which are likely to get 25c on the dollar. This might include your pension fund.

They have more than 700 ongoing projects which account for 1.4m units.

You have to assume that their business practices are common across China's construction industry.

The CCP want to make sure that the customers are made whole. That means banks and financial institutions eating the loss. That's proper order in my book but it will impact us all.

If this is China's Lehman Brothers, there is going to be an enormous global economic/political fallout.
 
BodyButter said:
If this is China's Lehman Brothers, there is going to be an enormous global economic/political fallout.
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I've been seeing a lot of analysts say its more Bare Sterns than Lehman 300B vs. 600B. Bare Sterns had about 350B in total assets when they failed which is similar to Evergrande.
 
CDX_EIRE said:
I've been seeing a lot of analysts say its more Bare Sterns than Lehman 300B vs. 600B. Bare Sterns had about 350B in total assets when they failed which is similar to Evergrande.
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The real worry is about contagion. I didn't believe that Evergrande were doing anything unique. If they are having problems, the rest of the Chinese construction industry is having problems. You'd also have to be concerned about the banking system and it's ability to withstand a crisis like this. It's also difficult to have confidence that the CCP can manage this crisis given how disastrously they have handled everything else in recent years.
 
Another Chinese property developer, Fantasia Holdings, has defaulted on its debt.

Apparently, the top 21 Chinese developers owe $1.06 in interest payments for every $1.00 of revenue they have.
 
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BodyButter said:
Another Chinese property developer, Fantasia Holdings, has defaulted on its debt.

Apparently, the top 21 Chinese developers own $1.06 in interest payments for every $1.00 of revenue they have.
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I’m no expert on the business models of property developers and even less so on Chinese ones (obviously), but in an industry where your suppliers want payment in a couple of months but it could take a lot longer to sell the finished property and get the cash in, that doesn’t sound a good stat.

I guess they’re throwing the apartments up like no mans business but the demand isn’t there to sell?
 
Another Chinese developer missed a bond interest payment. This one is called Sinic Holdings.

One take on the crisis unfolding in China's property development industry is that the CCP have decided to pull the plug on ever increasing house prices. In some cities the average house price is 43 times the average salary. That ratio should be 3. In London, it's 12.

I suspect we are going to see a massive property bust coming over the next decade. House prices around the world are through the roof and the demographics have swung against an ever expanding property market.
 
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