China's largest real estate player Evergrande declaring bankruptcy
Updated: Dec 13, 2021
The fortune 500 company suddenly declaring bankruptcy makes us think about where the global real estate market heading?..
Is this signaling us towards another global financial crisis after the Lehman brothers' fallout in the year 2008?
Evergrande is a fortune global 500 enterprise & the biggest residential developer in China with yearly sales amounting to $110B. Employees 2 lakh directly & creates 3.8m jobs each year indirectly. The current liability stands at 2% of China’Immediate repayment of about $305B is due to Lenders, Suppliers (building materials) & other investors.
Evergrande has a pure debt against real estate development, a known product. Most of the debt to Evergrande is by Chinese banks & hence its effect does not seem to be affect globally. There are hardly any foreign investments in the Chinese real estate sector, another reason it should not affect globally. Evergrande will reduce their properties price to pay back loans and hence there will be a distinct impact in the housing market locally, employment & hence consumption.
If the Chinese government in any sense comes out to bail, Yuan will further depreciate.
My observations.
I am not too sure to point that after the Lehman brothers fall out EverGrande could lead to the biggest financial bankruptcy crisis. I have been witnessing that more than 200 companies in China alone for the last two years have announced their closure due to bankruptcy. Evergrande went out of their real estate market to build the largest football stadium in China, entered drinking water space & finally invested heavily in EC cars & scooters n above their core businesses to run flourish & repay back their principal company financial holding.
Just heard another Chinese real estate developer company collapsed this afternoon .
Shanghai based real estate developer Sinic holding HK is racing with Evergrande to the bottom. Get ready for new banking financial crisis in HK & China !! The sinic company holding news to be reconfirmed by authentic sources once again.
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