Posted on 10/15/2021 8:05:35 AM PDT by SeekAndFind
Nearly a month after the Evergrande crisis went to 10, sending property sector bonds crashing to near record lows and sparking a sharp swoon in China's property sector, the country's central bank finally broke its silence on the crisis at Evergrande , saying risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread.
Speaking at a news briefing on Friday, PBOC official Zou Lan - head of the financial market department. - said that authorities and local governments are resolving the situation based on “market-oriented and rule-of-law principles” Bloomberg reported. Additionally, the central bank has asked lenders to keep credit to the real estate sector “stable and orderly,” said Zou.
“In recent years, the company failed to manage its business well and to operate prudently amid changing market conditions,” Zou said of Evergrande, which has more than $300 billion of liabilities. “Instead it blindly expanded and diversified.” The rhetoric was reminiscent of China's commentary preceding the demise of HNA and Anbang, which subsequently failed.
On one hand China's admission that something is happening in the property sector was a welcome change from the persistent radiosilence until now; on the other, the jawboning is unlikely to ease fears amid investors who are clamoring for more PBOC easing which however is looking unlikely at a time when China's PPI has hit multi-decade highs amid soaring commodity inflation. Furthermore, concerns are growing that the cash crunch at Evergrande is spilling over to other developers, sending a shockwave among China's property sector - which accounts for roughly 70% of local household wealth and directly impacts about 30% of China's GDP. Contagion fears intensified over the past two weeks after a surprise default by Fantasia Holdings Group Co. and a warning from Sinic Holdings Group Co. that its default was imminent.
The central bank is urging property firms and their shareholders to fulfill their debt obligations, Zou said. A slump in developers’ offshore dollar bonds is a natural market response to defaults, he added.
Some other comments from the central banker:
In an actual tangible change, overnight Bloomberg also reported overnight that financial regulators told some major banks to accelerate approval of mortgages in the last quarter. Lenders were also permitted to apply to sell securities backed by residential mortgages to free up loan quotas, easing a ban imposed early this year, according to people familiar with the matter.
Regulators will ensure financial support is provided so that Evergrande’s property projects may resume, Zou said. The developer’s rapid expansion “led to severe worsening of its financial metrics, and risks blew up in the end,” he said.
It remains to be seen if this attempt to restore faith in China's flagging property sector will succeed.
It’s just a flesh wound.
Risks “Controllable” And Unlikely To Spread
The central bank is urging property firms and their shareholders to fulfill their debt obligations.
Fasten seat belts
Oh, sure. China telling us everything’s fine. It’s controllable. Don’t worry.
Anyone up for some bat soup?
Unlikely to spread? In other words, economic Covid.
That is so reassuring and puts my mind at rest. The CCP never lies. lol
Lol. Fools think that totalitarian govt provide stable economies. Nothing is more corrupt.
The Chinese strategy has always been that they can survive in spite of millions of their own citizens dying. They have plenty to spare and they, the elites and the Party, will survive.
It is not too much of a stretch to think that this was all planned.
Actually, they are right. The debt in question isn’t held all over the world, it’s mainly Chinese. They are breaking up the pieces of debt and spreading it to many Chinese provinces so it’s controllable.
This will disappoint the people who spend all their time buying spam and hoping for disaster but they should be getting used to disappointment by now.
Well, I don't know.... DC. is getting pretty darn BAD.. I think the politicians are selling themselves on the street corners nowadays...
Freepers interested in Evergrande may find this interesting:
Here is a 29 minute video by two guys who have lived in China, speak and read the language, and I believe have Chinese wives. They know what is going on from personal experience.
I recognize the guy on the right, but I do not remember his name. He broke the story of “Patient Zero”, the first person to get infected at the Wuhan lab with covid-19.
They explain how the Chinese real estate market might just be the biggest Ponzi scheme in history.
They inserted a commercial for Nord VPN at the 13 minute mark. Don’t let that throw you. You can skip it with the scrollbar if you like.
You can listen in the background, but you should really sit and watch it for the videos.
https://www.youtube.com/watch?v=lKbLB_T-IjY
Good post.
Order them to work 24X7 to fix it.
Learn from Joe Xiden.
Ah yes, controllable just like in the US in 2008.
The one bullet solution generally ends “problems” in CCP China.
Sound like the bullsh!t Bernanke and Paulson were spreading in 2007.
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