Could this company trigger the next global financial crisis?
The Lehman Brothers of China? According to CNBC, protesters in China stormed the company HQs this week.
Shares down by 86% year to date :eek:
It is Cytonn’s version in China - on steroids. And it’s doing exactly what I told people Cytonn will do eventually - paying investors and creditors with property instead of cold hard cash.
Traders and investors have wrongly assumed that global financial crises can only begin in the USA but it’s a brave new world now. The crisis might start in China, just like the virus.
A company that is over $300 billion in debt definitely poses systemic risk to China and the world by extension.
These shareholders have definitely shed premium tears like the Kenyans who invested in KQ and Mumias years ago.
This is a huge exaggeration. If the US government could afford $450 billion in bailouts to banks, China would be prepared to spend multiple times that amount on anything that threatens a key sector.
Evergrande is just ONE company in China. It is the second largest developer. The Chinese government can bail it out, but can it bail out the hundreds of other companies in the property sector there?? Evergrande is just the first one and bailing it out might be simply postponing the problem a few months down the line.
The US government could have bailed out Lehmann brothers but it didn’t, why? Because most of the other banks were in the same position and it couldn’t bail out all of them.
Yes. Only that Evergrande is the one that has kicked the hornet’s nest.
The US government could have bailed out Lehmann brothers but it didn’t, why? Because most of the other banks were in the same position and it couldn’t bail out all of them.
If you wait for complete data you will never act at the right time. By the time all data becomes available, it is already too late. You are supposed to use your common sense to fill knowledge gaps. Evergrande is large enough to act as a sample.
If the second largest property developer is about to go under, what does that say about the remaining long list of developers?? They are in a similar position or worse. Lehmann Brothers was the first to get exposed. It turned out most of the other banks were holding the same toxic assets. Apply the same logic here.
Lehmann Brothers did not cause the financial crisis. It simply triggered it. The same goes for Evergrande. It is not large enough to cause a crisis on its own, but big enough to trigger it.
Speculators, using common sense, have been predicting a collapse of the Chinese property market since 2008. Two, you cannot draw parallels between the Chinese and the US property market. The Chinese market is highly controlled by the government. The assumption that other firms are in trouble because one is in trouble is a huge fallacy.
Theres a difference between a bank ( Chase) and a investment bank ( Lehman) . A bank will always have assets that can be liquified at a future date, At the time. Lehman was holding on to mostly incommutable assets.
Fantasia is a very small firm of no consequence in the larger picture. It ranks at position 60 in sales contracts. You don’t just go amplifying small events without looking deeper to understand the background.
Next argument.
When 2 firms out of 1000 firms face hiccups, that does not qualify to be a crisis. Learn to interrogate financials as opposed to flowing with what the media says. The real story lies in the numbers and not the opinions you gather from bloomberg. As I told you before, the Chinese property market has been collapsing for the past 10 years according to bloomberg and others. The things you are hearing today I heard them a decade ago.
