September 20, 2021

CHINA: Communist China's Real Estate Giant Owes $300 Billion And Expected To Default On Outstanding Debt. Triggering Global Financial Crisis. Stock Tanked 90%.

Graham Stephan published September 20, 2021: Everything Is Falling
The Evergrande Crisis Explained.

All of this starts with the Massive Chinese Real Estate company: Evergrande.

They were originally founded in 1996, and since then - they’ve become China’s second largest property developer, specializing in residential construction, hotel operations, finance, and the health industry. Their core business is buying up empty plots of land, and then transforming them into large residential buildings….although, over time, the company ALSO diversified their business across bottled water, electric vehicles, theme parks, a streaming service…and even a soccer team!

But…there was a growing problem, and that would be: Debt. In order to PAY for the cost of building a new residential skyscraper…they need to borrow money. Most of that is generated from large banks, institutional investors, bond holders, and even homebuyers who agree to loan them money in exchange for a downpayment, or a modest interest rate over the following few years until the project is complete.

Evergrande took on $300 BILLION DOLLARS worth of debt to continue developing real estate, and this WORKED when they could build nonstop and continually roll that over to the next project…but when the Coronavirus lockdowns hit…everything was stalled. Supply chains were backed up, material cost went through the roof, labor was difficult to come by - and, as a result, their operations slowed down massively.

Investors, lenders, and bond holders don’t care if properties are half-finished and materials now cost 300% more…they want their interest payments as agreed. But, in June of 2021…Evergrande warned investors that they might not make their next payment, and that they were aggressively working to restructure debts to stay afloat.

At the same time, China issued a statement that banks should STESS TEST their exposure to Evergrande, meaning - they need to make sure they’ve not over-exposed in the event something were to happen…but the entire time, Evergrande said that they were operating as normal, there’s nothing to worry about…and it was business as usual…except, as we later found out, it wasn’t.

On September 16th, China warned that Evergrande wouldn’t pay their interest the following week…and, instead, they would be renegotiating the terms to give them more runway to operate, and sell off their buildings to raise capital..but, that presented another problem.

Evergrande was at a complete standstill. They don’t have the resources to finish their half-built projects. No one wants to buy a half-built property for fear that values might continue to drop. Evergrande stock has dropped more than 90%, and the company is behind on its obligation to more than 70,000 investors. More than one MILLION buyers of unfinished projects are in limbo, having already submitted a downpayment that could now be worth absolutely nothing.
Trey's Trades published September 20, 2021: China and the dump. AMC stock and Evergrande.
an update on the current market conditions and AMC.
CNBC Television published September 20, 2021: Evergrande 'not too big to fail': Chinese state media. CNBC's Eunice Yoon gives an update on Evergrande from Beijing. She said the Chinese markets are going to resume trading on Wednesday. Both Monday and Tuesday are holidays in China.
Bloomberg Markets and Finance published September 20, 2021: Evergrande Default Likely Without Direct Support, SandP Says. Sep.21 -- SandP Global Ratings says China Evergrande Group is unlikely to receive direct government support and the embattled real estate developer is on the brink of defaulting on upcoming debt payments. Stephen Engle reports on "Bloomberg Markets: Asia."

France24 News, France local
written by AFP staff
Monday September 20, 2021

Anxious investors, employees and suppliers describe a scramble inside teetering Chinese property giant Evergrande, in a crisis that has shaken public trust as it struggles to tide over a liquidity crunch.

The once-mighty Evergrande Group has long been the face of Chinese real estate, surfing a decades-long property boom to expand into more than 280 Chinese cities as it peddled home-ownership dreams.

But it is now smothered by a $300 billion liabilities burden that has crushed its credit rating, share prices and reputation among a once-adoring public.

Throughout last week, the concourse outside Evergrande's mirrored offices in the southeastern city of Shenzhen was occupied by unpaid contractors, angry sales agents and investors -- scenes echoed across a country where prolonged protest is rarely tolerated.

Now, as default appears all but inevitable, fears are abounding of a contagion within the Chinese property market -- and far beyond.

- 'Severe punishment' -

In an apparent response to rumours that riled investors, the company on Saturday vowed "severe punishment" for six managers found to have redeemed their investment products ahead of maturity dates.

It has also offered property and parking spaces instead of cash repayments of its debts. Investors have given the plan a frosty reception, citing a collapse in faith.

"What I want is cash," said an investor who identified himself only by his surname Feng. "I'm not considering this plan."

AFP has reached out to Evergrande repeatedly in recent days, but the firm has declined to comment.

Disgruntled Evergrande staff told AFP they were pushed to ramp up sales of financial products promising generous returns -- or to invest more themselves.

Rates of return ranged from seven to nine percent, according to staff and advertisements seen by AFP.

"They wildly encouraged us to boost performance, giving us rewards," said an Evergrande Wealth sales consultant on condition of anonymity.

But she claimed it became impossible to reach managers in early September, when the company started facing trouble making repayments -- triggering alarm.

"Many clients put all their assets and retirement funds into Evergrande because they trusted (chairman Xu Jiayin) would be at the wheel and nothing would go wrong," she said.

Another employee surnamed Huang who bought financial products added: "Ahead of the maturity date, they asked us to put in more money instead of collecting repayment."

She and her relatives collectively put in 1.5 million yuan ($230,000), enticed by promises of higher interest.

"Now we've lost everything," she told AFP in Shenzhen.

Sales tactics, according to several suppliers, involved pressure on business partners as well.

- 'Dumbfounded' -

Big promises also accompanied a residential-retail-entertainment development in the eastern Suzhou city that now has hundreds of investors fearing for their nesteggs.

The Evergrande Cultural Tourism City was to include apartments, a theme park and a commercial quarter made to resemble an old European village.

But homebuyers jammed the unfinished site ahead of completion, thrown into a frenzy by the firm's financial troubles.

One investor who asked to remain anonymous said buyers were initially persuaded to grant sales staff authority to sign documents in their names, reassured by the firm's reputation.

But what followed were changing schedules for flat deliveries, financial terms slipped in without notice, and bills for property management fees for apartments that were nowhere near complete.

"I was dumbfounded," she said.

- Checks and balances -

"The whole story shows that lenders and other suppliers of capital have not done their job in exerting proper checks and balances on Evergrande," University of Hong Kong professor Zhiwu Chen said.

Once a symbol of its might, Evergrande's Shenzhen headquarters is now a besieged barometer of the wide swathe of potential collateral damage, with investors, suppliers and other partners holding daily vigil.

Cleaner Wang Demei, 40, slept outside on a piece of cardboard, seeking unpaid salaries for 70 people who she helped arrange to provide cleaning services to Evergrande.

She borrowed money from loan sharks to pay some staff, but said: "We can't repay these (loans)."

The sales consultant meanwhile said hundreds more financial managers could lose their careers if Evergrande fails to solve its debt repayment problem.

"Our personal credibility has collapsed," she added.

Small businesses across the country also said they have been forced to let workers go, scale down or close entirely due to financial stress.

But many people remember Evergrande differently.

"Its original aim was to help allow us working families afford an apartment," a retired teacher surnamed Liu said.

Since 1997, she and her husband have lived in the very first residential compound Evergrande built -- in Guangzhou city where the firm started out.

"Evergrande is not a terrible company... It is one that has looked after us," she said.

AUSTRALIA KARMA for evil totalitarian unscientific lockdown and close ties to Communist China. ๐Ÿ‘‡
Free Malaysia Today
written by AFP Staff
Tuesday September 21, 2021

BEIJING: The chairman of indebted Chinese housing giant Evergrande has told staff he believes the group will “step out of the darkest moment soon”, state media reported today, as Asian stock markets panic over fears the conglomerate will default.

The embattled developer has been struggling to appease angry homebuyers and investors as it sways on the brink of collapse with debts exceeding US$300 billion.

Xu Jiayin, who founded the company in 1996, told staff in a letter to mark mid-autumn festival that he “firmly believes Evergrande will be able to step out of the darkest moment soon”, reported the state-run Securities Times.

He went on to say Evergrande would increase the full resumption of work and production, ensure the delivery of buildings, and “hand over a responsible answer to home buyers, investors, partners and financial institutions”.

He also thanked staff for their hard work in the letter, as China celebrates a two-day public holiday.

It came as fears of contagion saw Hong Kong and Tokyo stocks tumble in morning trading, with other property firms in the firing line.

The Evergrande crisis has even triggered rare protests outside the company’s offices in China by investors and suppliers demanding their money – some of whom claim they are owed as much as US$1 million.

The company admitted earlier this month that it was under “tremendous pressure” and may not be able to meet its liabilities.
UPDATE 9/26/21 at 12:01pm: Added info below.

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