Evergrande is listed in HK stock exchange. Its main office is...

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Cosmoterios

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21/09/21

10:27

Post #: 56229047
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Originally posted by NavyDiver: ↑

Spreading as expected. Billion $ wipe outs tend to do that

"Hong Kong real estate giants including Henderson Land Development Co. suffered the biggest selloff in more than a year on speculation China will extend its property clampdown to the financial hub. Fears of contagion from China Evergrande Group continued to intensify, dragging down everything from bank stocks to Ping An Insurance Group Co. and high-yield dollar bonds."

Question is, is it the market or China CCP doing the damage?

"Are Hong Kong Property Tycoons China’s Next Target?"

Either way many banks and bonds are going to get a hiding today.

"Catch the falling knife at your own risk. We knew that the rules of the game had changed as early as July, when Beijing put ride-hailing giant Didi Global Inc. under regulatory review after it defied warnings and went ahead with its U.S. initial public offering. China no longer sees shareholder capitalism serving the nation well; now, it’s going for stakeholder capitalism, where customers, employees and even local governments all have a say in how companies do business and retain their earnings. "

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Evergrande is listed in HK stock exchange. Its main office is based in China.

For Chinese to invest in the HK Stock Exchange, they have to meet minimum asset requirements. That means there are no small Chinese investor in Evergrande. Those invested would likely be sophisticated investors.

Its bankers are a mixture of Chinese and HK banks.

The company holds some 45M square metres of land.

Unlike banks (Lehman) which can leverage multiple times its assets, companies like Evergrande can only borrow 70 to 80% of its secured assets. That means, even if a fire sale were to occur and these land and apartments were sold at 50%, the banks and bondholders will Only take a 20% to 30% haircut. That is between $60B to $90B.

With a banking sector that is worth $55T, that hit is like 1 to 2% to the Chinese banking system (if all was to be borne by Chinese banks and bondholders).

In actuality, its likely to hit HK much harder, where it's listed.
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