China Property (thread #2)
Continued stress as developers sales -50% YoY, but home price drop eased.
Property equities $CHIR retreated but +1% YTD.
Bonds -33% YTD with "sell first, think later" mentality. No trust.
More background in prev thread:
1/
Continued stress as developers sales -50% YoY, but home price drop eased.
Property equities $CHIR retreated but +1% YTD.
Bonds -33% YTD with "sell first, think later" mentality. No trust.
More background in prev thread:
https://twitter.com/ssinvestments8/status/1484059606355570689?t=zLnMECSp8DwvBTpxBPR5hw&s=19
1/
Total lack of trust with hidden off-balance sheet debt uncovered bit by bit.
Basically hidden as "minority interest" within balance sheet equity.
With net debt to total equity and to shareholders equity at 68% and 115%, it implies hidden debt at 41% of equity.
h/t @jpmorgan
2/
Basically hidden as "minority interest" within balance sheet equity.
With net debt to total equity and to shareholders equity at 68% and 115%, it implies hidden debt at 41% of equity.
h/t @jpmorgan
2/
Land sales is tied to 40%+ of local govt revenue and developers are being forced to deleverage, resulting in lower land acquisitions.
This is a funding problem for social welfare and local govt credit.
When all problems are tied together, a quick solution seems unlikely.
3/
This is a funding problem for social welfare and local govt credit.
When all problems are tied together, a quick solution seems unlikely.
3/
The tone has shifted to easing for the sector, but it's unclear if it means for the entire sector or just the state-owned developers.
Most bonds in the mkt are issued by privately-owned developers but mostly just the state-owned players have access to liquidity, i.e. oxygen.
4/
Most bonds in the mkt are issued by privately-owned developers but mostly just the state-owned players have access to liquidity, i.e. oxygen.
4/
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