World Evergrande problems access Europe over - from construction to luxury

13:50  22 september  2021
13:50  22 september  2021 Source:   finanzen.net

Shares in cash-strapped China property giant plunge

  Shares in cash-strapped China property giant plunge Evergrande has also seen a rare protest staged by investors at its headquarters in Shenzhen.The firm said it is struggling to sell assets fast enough to service its massive $305bn (£220bn) of debts.

(Bloomberg) - the shock waves of the Evergrande crisis are far beyond the Chinese real estate market. The stuttering of the global growth engine getting primarily sectors such as building materials, mining and luxury goods.

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The STOXX 600 Basic Resources Index has fallen by 18% since its high of August and thus twice as strong as the next-sleeved sector index, which is the meaning of China for heavyweights such as BHP Group PLC and Rio Tinto PLC reflects.

Evergrande debt crisis: 5 things to know about the Chinese business empire on the brink

  Evergrande debt crisis: 5 things to know about the Chinese business empire on the brink The troubles of Chinese conglomerate Evergrande have dominated headlines in recent days after it warned once again that it could default on its astronomical debt because of a cash crunch. © JADE GAO/AFP/Getty Images A woman riding a scooter past the construction site of an Evergrande housing complex in Zhumadian, Henan province on Sept. 14, 2021. Experts have characterized the firm's struggles as a major test for Beijing that risks turning into China's Lehman Brothers moment, sending shockwaves across the world's second biggest economy.

for the Gucci owner Kering SA, whose growth is closely linked to the prosperity of the Asian country, it was 20% down in the same period on the stock market. The titles of the elevator manufacturer Kone Oyj have fallen by 14% since the end of August.

"Much of the prosperity and economic activity has been linked to the massive increase in real estate prices and real estate assets in China for three decades," says Peter Garnry, head of the equity strategy at Saxo Bank. The consequences of a possible collapse of Evergrande could be "lower growth momentum in China over the next 10 years, as resources are redirected to other areas."

Continued weakness in China drags European luxury stocks and miners lower © Bloomberg Continued Weakness in China Drag's European Luxury Stocks and Miners Lower

Even before the crisis of China Evergrand Group The financial markets shattered, slows down chinese growth. Bank of America has just lowered its three-year economic forecasts for the country and establishes this with the outbreak of the delta variant and the tightening of controls for the real estate and infrastructure sector. Also Pictet Wealth Management explained that her forecasts could be at risk.

The real estate giant Evergrande soon bankrupt, with Domino effect on China's economy?

 The real estate giant Evergrande soon bankrupt, with Domino effect on China's economy? © Patricia Lazaro / Pexels The real estate giant Evergrande soon bankrupt, with Domino effect on China's economy? For several weeks, the fall of the number 2 of Chinese real estate Evergrand has fears about the Chinese economy. Many companies are dependent on this group and the spectrum of the 2008 crisis with the collapse of Lehman Brothers is felt.

for mining companies are clearly the potential impact. At China, 62% of the turnover of BHP, 58% of Rio Tinto and nearly 50% of Anglo American PLC and Glencore PLC. Real estate is an important engine for the demand for metals. And a burglary of iron ore, an important revenue for BHP and Rio, according to Citi represents a short-term risk for the profits.

Miners are cheapest on record relative to the broader market © Bloomberg Miners Are Cheapest on Record Relative to the Broader Market

Kering is not the only luxury share that is endangered . Burberry Group PLC, Compagnie Financiere Richemont SA and LVMH Moet Hennessy Louis Vuitton SE, according to Liberum, achieve between 34% and 53% of their sales in the most populous nation in the world. "If China is snowing, the luxury companies get a pneumonia," says Luca Solta, Analyst at Amber.

The potential impact on European shares does not end here yet. Some industrial and semiconductor values ​​are heavily committed to China, as well as in the United Kingdom finance companies such as Prudential PLC and HSBC Holdings PLC.

Who Is Hui Ka Yan, Billionaire Founder of Indebted Chinese Property Developer Evergrande?

  Who Is Hui Ka Yan, Billionaire Founder of Indebted Chinese Property Developer Evergrande? Chinese users of the social media platform Weibo have called the former cement factory worker turned property developer "delusional" and "a man who cheats people."International credit-rater S&P Global recently predicted that China's government would decline to bail out the indebted company. However, Evergrande founder and chairman Hui Ka Yan projected an optimistic attitude, writing in a letter to his employees that the firm would "walk out of its darkest moment." This letter was not met with praise.

Chinese woes hit European apparel and luxury's valuation premium © Bloomberg Chinese Woes Hit European Apparel and Luxury's Valuation Premium

The Strategists of Liberum believe that cement manufacturers such as HeidelbergCement AG as well as construction suppliers such as Kone and Schindler Holding AG could be affected directly from the effects of the Evergrande crisis and see a price weakness in advance. It is more secure not to engage in China for the time being, they say.

heading in the original:

Evergrande's Troubles Have Ripple Effect in Europe: Taking Stock

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Evergrande's Looming Default Rattles China's Small Businesses That Hold Ties to Developer .
Business with Evergrande accounts for 90 percent of Guo Hui's business. Unpaid dues from the company have put his business on the verge of bankruptcy.As Newsweek previously reported, the effects of an Evergrande collapse are expected to hit the businesses who work closely with it the hardest. While some major creditors could soon lose out on tens of millions of dollars in unpaid loans, many have the assets to come out of such a loss alive.

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