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Australia Evergrande collapse could spark Chinese economic drama, hurt Australia

11:31  21 october  2021
11:31  21 october  2021 Source:   dailymail.co.uk

Real Estate: China worries, 2 directors of Fantasia gone, Evergrande at the edge of the chasm!

 Real Estate: China worries, 2 directors of Fantasia gone, Evergrande at the edge of the chasm! © Qilai Shen / Bloomberg / Getty Images Real Estate: China worried, 2 directors of Fantasia gone, Evergrande on the edge of the chasm! Concerns are emerging in China in the area while it is crucial for the country's growth. in China, Fantasia is a much less important player than Evergrande, strangled by 260 billion euros of debts.

Chinese property giant Evergrande is just 48 hours away from potential collapse - here's how it could spark economic catastrophe in China and Australia is ALREADY suffering. A deal that could have saved Chinese property giant Evergrande fell through. Hong Kong-based Hopson Development Holdings pulled out of deal to buy asset. Evergrande is 0billion in debt, has missed three annual interest deadlines. 30-day grace period on this debt obligation to bondholders expires on Saturday.

"It could set off a contagion through the Chinese credit system, making it harder for other property developers and other borrowers to get funds," he warns. "But it could also set off forced sales of properties, having the effect of pushing down, or crashing, the Chinese property market." That is, other large Chinese companies would be at risk of struggling with their own debt repayments because the value of the US dollar was rising. Evergrande 's problems likely to be 'ring-fenced'. Let's not get ahead of ourselves. Both Shane Oliver and Danielle Ecuyer say the Chinese government will attempt

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China's second biggest property developer Evergrande is on the verge of collapse after critical deal to stop a default fell through - and it could have major implications for Australia.

The 25-year-old mega apartment developer has debts of more than $400billion and has during the past month missed three annual interest payment deadlines to bondholders.

A 30-day extension on an offshore debt servicing obligation expires on Saturday - the end of a grace period which kicked in late last month.

Now the company founded by billionaire Xu Jiayin could fold with Hong Kong-based Hopson Development Holdings pulling out of a $3.4billion deal to buy 50.1 per cent of Evergrande's property services arm.

China central bank says Evergrande risks 'controllable'

  China central bank says Evergrande risks 'controllable' China's central bank said Friday that the risk of spillover from embattled property giant Evergrande to the financial sector was "controllable", breaking its silence on the company's debt troubles, state media reported. Concerns are mounting that the cash crunch at Evergrande -- which is struggling with more than $300 billion in liabilities -- could lead to contagion for the wider Chinese economy. Authorities are "carrying out risk disposal and resolution work in accordance with the principles of rule of law and marketisation," People's Bank of China official Zou Lan said at a briefing, according to an outlet under the Xinhua state news agency.

The Evergrande collapse could cause ripples across China ’s economy , cutting demand from China for other services and goods, Prof Powell said. “The effect of China buying less from Australia has been a matter of considerable debate. Some have argued Australia can compensate by diversifying into other markets,” he said. “But such things take time. Economists Rod Tyers and Yixiao Zhou, who have simulated the effects of Australia - China trade being shut down, have argued short-term effects could be severe.” China ’s is the world second biggest economy and its property sector makes up 25

Australia 's most powerful bankers have revealed they are worried about the possible collapse of Chinese property giant Evergrande and Xi Jinping 's Communist policies aimed at the rich. Nonetheless, Reserve Bank of Australia governor Philip Lowe and his board members noted China 's attempts to address financial system problems could potentially lower growth in China , the world's second biggest economy . China 's economy grew at an annual pace of 4.9 per cent in the September quarter, down sharply from 7.9 per cent in the June quarter, the National Bureau of Statistics revealed

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Evergrande has admitted it would struggle to meet its debt repayment requirements, sparking fears of a default.

That would cause wider financial market problems in China, Australia's biggest trading partner and the world's second biggest economy.

'There is no guarantee that the group will be able to meet its financial obligations,' Evergrande told the Hong Kong stock exchange late on Wednesday night.

Evergrande, headquartered in Shenzhen, saw its share price plunge by 10 per cent during Thursday's Asian trade.

It had suspended trading on October 4 pending 'an announcement containing inside information about a major transaction' which hasn't materialised.

In August 2020, Chinese President Xi Jinping's government introduced a new 'three red lines' policy requiring developers to sell assets, even at a cheap discount, to avoid piling on more unsustainable debt.

China: Evergrande could "not be able to honor its financial obligations"!

 China: Evergrande could © An Xin / Costfoto / Barcroft Media via Getty Images China: Evergrande could "not be able to honor its financial obligations"! Evergrand returns on the stock market (recovery of quotation of the actions). Evergrand warns, however, that it could "not be able to honor its financial obligations". The property promoter in difficulty "will continue to implement measures to mitigate (its) liquidity problems".

What could it mean for Australia ? Real estate makes up a substantial share — more than a quarter — of China 's economy , which is the second largest in the world. There are fears that if Evergrande goes under, that could spark a domino effect that impacts the wider "If there is a major slump in China 's property market, then it has a major effect on economic growth, which of course has a huge impact on global growth, and of course is bad for Australian commodities," Shane Oliver from AMP capital said. Australian iron ore is exported to China to make steel, much of which is used for for construction, so

But as the Evergrande collapse bites, real estate development can be curtailed. Treasury professor Robert Powell of Edith Cowan University said investors and lenders would be more cautious and could cause a credit crunch. “This can significantly undermine real estate development, and there is a demand for construction materials, including steel, made primarily from imported iron ore,” he said According to Professor Powell, the collapse of the Evergrande Group could cause ripples in the Chinese economy as a whole and reduce demand from China for other services and commodities.

Billionaires have also been targeted as part of his 'common prosperity' program to redistribute wealth away from the ultra-rich.

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China is already home to 65million empty apartments, with enough space to house 90million people in a nation of 1.4billion.


Video: Evergrande shares fall on market return (Sky News Australia)

The property crisis is coinciding with Chinese Communist Party orders to reduce steel production to meet 2060 net zero climate change targets.

This has caused the spot price of iron ore, Australia's biggest export, to halve from $US200 a tonne in late July to less than $US100 by the end of September.

The latest Evergrande developments have hurt Australia's big miners with Rio Tinto plunging by 1.3 per cent to $96.79 on Thursday.

Iron ore group Fortescue Metals Group dropped 0.6 per cent to $14.41.

Evergrande shares plunge on market return as deal falls through

  Evergrande shares plunge on market return as deal falls through Chinese property giant Evergrande's shares plunged Thursday after resuming trading in Hong Kong, with the failure of a unit sale deal deepening fears the indebted firm will collapse and send shockwaves through the world's second-largest economy. Evergrande had suspended trading on October 4 pending an announcement on a "major transaction" as it struggled with some $300 billion of debt -- with investors worried about the potential fallout from its predicament. On Thursday, its shares dropped 10.5 percent at the open, and were later trading about seven percent down.A deal worth HK$20.04 billion (US$2.58 billion) to sell a 50.

The Evergrande collapse could cause ripples across China ’s economy , cutting demand from China for other services and goods, Prof Powell said. “The effect of China buying less from Australia has been a matter of considerable debate. Some have argued Australia can compensate by diversifying into other markets,” he said. “But such things take time. Economists Rod Tyers and Yixiao Zhou, who have simulated the effects of Australia - China trade being shut down, have argued short-term effects could be severe.” China ’s is the world second biggest economy and its property sector makes up 25

Evergrande was China 's top-selling property group. (Reuters: Tyrone Siu). Investors are watching closely whether Evergrande can make Saturday's deadline of 0 million in interest payments. A further million interest payment was missed on September 29 and the grace period is also Fighting for survival, Evergrande has been scrambling to raise funds by selling assets and offering discounts on apartment sales. Earlier this month, its shares were halted on the Hong Kong Stock Exchange, sparking speculations of potential asset sales. The Chinese media previously reported

The Reserve Bank of Australia's October meeting minutes highlighted concerns about Evergrande.

'While Evergrande is small relative to the financial system in China, members noted a financial stability risk from spill overs to other developers and financiers if the resolution of Evergrande's problems were to be disorderly,' it said.

People's Bank of China governor Yi Gang on Monday admitted Evergrande's problems 'casts a little bit of concern' in a virtual meeting of the Group of 30 but he was optimistic there would not be wider effects.

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'Overall, we can contain the Evergrande risk,' he said.

Nonetheless, Reserve Bank of Australia governor Philip Lowe and his board members noted China's attempts to address financial system problems could potentially lower growth in China.

'In China, authorities had continued to balance addressing increased financial system vulnerabilities with avoiding a realisation of those vulnerabilities that would sharply lower economic growth,' the RBA minutes said.

'This trade-off had been a feature of the significant focus on the liquidity crisis facing Evergrande.'

Read more

Evergrande EV unit soars after chairman prioritised that business .
Stock rose on the news that the group would make its EV unit its primary business, instead of its real estate one.Evergrande, reeling under more than $300bn in liabilities, averted a costly default last week with a last-minute bond coupon payment, buying it more time to head off a looming debt crunch with its next major payment deadline on Friday.

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