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China ‘Lehman Moment’ Warnings Return As Evergrande Saga Spirals
Maybe we're witnessing "Beijing's Volcker moment," as Nomura's Ting Lu put it last month, in a lengthy exposition detailing the extent to which Chinese officials appear willing to "sacrifice some near-term GDP growth for taming home prices and diverting financial resources out of the property sector" which, he gently reminded market participants, "makes up one-quarter of China’s economy."
In the same note, he suggested investors' obsession with various regulatory crackdowns is blinding market
Interesting timing for this pot to boil. Not that this market needs any further rationale to head south a bit, but I wonder if this emergent “large squishy fear factor” is just the ticket, post-opex, to help markets decide which way to wiggle with their newfound freedom this month.
For scaling purposes, I believe Evergrande liabilities are 2% China GDP, AIG bailout was 1.2% 2008 US GDP, Lehman assets covered by bankruptcy filing were 3.8% 2008 US GDP. So, seems big enough.
Thank you. Have you seen any estimate of total large property developer debt including CP?
Why is editor Hu taking comfort in a high “down payment ratio”? It’s not the buyers that are defaulting here. A low ratio would be better. Unless I misunderstand his reference.
Is your conclusion ironic?