1. Keep your eyes forward rather than in the rearview. As warned last week, Sunac (1918.HK) is an elephant to watch out for - huge domino if it falls.

2. Bonds had a scare in July with #EG initial descent, but regained ground. Equity isn't buying it.
9/14 Equity Trading:

Evergrande: -11.9%
*** Sunac: -11.2% ***
Country Garden: -8.1%
GZ R&F: -7.7%
Greenland: -6.0%
Vanke: -5.5%
Fantasia: -4.2%
China Resources Land: -3.3%
Shimao: -2.9%

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More from @TheLastBearSta1

15 Sep
🚨🚨 China Credit - Writing on the Wall - and How to Trade It. (9/15/21)👇👇
2. In June, I described contagion in the Chinese credit as a tail risk - not necessarily a probability, a significant risk that was being underpriced. But now the fuse has been lit and no one is stamping it out. The collapse of the property sector is now a probability.
3. (If you're newer to the saga, I'd encourage you to read this master thread below thread in sequence as it provides necessary pretext. If you're up to date, then jump right in.)
Read 25 tweets
10 Sep
This relates to EG's wealth management product ("WMP") of which 99% of employees are invested in (they are protesting). Some top brass left and were paid out before payments halted. WMPs are a huge funding source for developers. Citizens (who buy apts) are creditors. Disaster.
2. WMPs, which are funded by citizen's savings, totaled $1 TRILLION dollars according to BBG, and regulators are cracking down. bloomberg.com/news/articles/…
3. Reported: Staff of Shenzhen Financial Bureau: “We are not sure if Evergrande Wealth belongs to the Financial Bureau, the China Banking Regulatory Commission, or the People’s Bank of China. It is currently not on our P2P list.”
Read 4 tweets
8 Sep
🚨🚨A Timeline of Contagion (9/8/21)👇👇

Why do I believe contagion in the property sector could cause a Chinese banking crisis? Well, because its been underway for some time...

2. Evergrande is the Gorilla, but it is not unique nor is it the first. Below is the debt and equity trading of large stressed developers, in chronological order from when their debt began to fall. (these are USD bonds - onshore debt would be better but data is less accessible)
3. The First Domino: China Fortune Land Development ($61bn of liabilities): Defaulted in January - the first major default of this tightening cycle. Ping An - largest insurer in China - reported a $5.5bn loss relating to China Fortune in its 1H21 results.
Read 22 tweets
7 Sep
🚨🚨China Credit Update- Gradually then Suddenly (9/7/21)👇👇
2/ Evergrande is dead. Long live Evergrande. For those paying attention, this has been a forgone conclusion for a while. Now is the critical juncture - what will be done to contain it. The fate of Chinese credit markets and banking sector and hang in the balance.
3/ Contagion is the next step. Contagion is a disease that spreads - its a crowd panic of self preservation. Creditors were forced to take losses on EG and for some it could be fatal. If you're are a lender to property developers you're only concern is saving your own ass.
Read 25 tweets
7 Sep
China Credit Thesis - Master Thread:

(since Twitter is hard to navigate)
Read 8 tweets
30 Aug
BIG PICTURE China Credit Update (8/30/21)👇👇

Since initially warning about China's credit markets in June (an eternity in Twitter years), a lot has developed and so its worth zooming all the way out and re-evaluating the thesis:
2/ Recap: I argued that China's credit markets posed underappreciated risk as a massive growth in debt since the GFC was put strain on the banking system, and that the property sector was the key risk given its size, role in economic growth, and private wealth held in property
3/ This setup is not new, but Beijing's recent push to break moral hazard is. Faith in central invention has been the key to maintaining peaceful markets and therefore the push to break the backstop introduced a critical new risk that could make this episode unlike previous ones
Read 28 tweets

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