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Rebecca Choong Wilkins 钟碧琪 Profile picture
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Jun 21 • 5 tweets • 3 min read
We’re entering a new phase of stress in China’s financial markets as the economic fallout of the property crisis and stop-start lockdowns begins to show up.

Stress at the conglomerate Fosun – owner of Club Med and the Wolves – shows contagion risks are alive and kicking 🧵1/5
The sudden and deep plunge in Fosun’s dollar bonds to record lows shows the spotlight is shifting to unforeseen risks in the rest of China’s $350 billion offshore junk bond market after the painful crackdown on property. 2/5
Contagion risks are still live -- the selloff at Fosun is already spreading to other industrial firms. Add that to fresh declines among casino names and that leaves very little room to shelter.
h/t @iverunoutofname @lorretta_chan 3/5
bloomberg.com/news/articles/…
Memories of hidden debt and transparency red flags are fresh in investors' minds after record property defaults. Fosun, a conglomerate that survived the 2017 clampdown on debt-fueled M&A spending, has a complex corporate structure -- adding to worries 4/5
bloomberg.com/graphics/china…
Why are investors so worried about Chinese conglomerate Fosun and its hefty debt load? And what are the risks of contagion for China’s financial markets?

Breaking down the latest w/ @RishaadTV @julesaly for @BloombergTV 5/5

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More from @RChoongWilkins

Rebecca Choong Wilkins 钟碧琪 Profile picture
Mar 22
It's all kicking off at Evergrande. Again. Here's everything that happened today 🧵 1/5
Evergrande is hosting a call with investors later today. Creditors want details of a restructuring plan. But earlier it warned of delayed results. And its property services unit said banks seized ~$2 billion of cash used as security for third-party pledge guarantees 👀 2/5
Evergrande Property Services said it discovered $2.1b of its deposits were used as security for pledge guarantees while preparing its annual report. That effectively wipes out most of its cash. The unit was considered one of the group's better assets.  3/5
bloomberg.com/news/articles/…
Read 5 tweets
Rebecca Choong Wilkins 钟碧琪 Profile picture
Mar 15
China’s markets are imploding. Why? Because the priority is common prosperity – not protecting profits for Western investors. Here’s what to watch 🧵 1/5
“What we are experiencing is a seismic shift in the ownership of Chinese stocks. US institutional investors are still major players… But look at what’s been happening: Chinese investors have been buying on dip” writes @shuli_ren 2/5
bloomberg.com/opinion/articl…
Hong Kong stocks haven’t been this oversold since 1987 -- the Hang Seng Index’s 14-day RSI, which helps measure whether an asset is in so-called overbought or oversold territory, plunged to 15. This hasn’t happened since the Wall Street crash. 3/5
Via @KevinKingsbury
Read 5 tweets
Rebecca Choong Wilkins 钟碧琪 Profile picture
Mar 14
It’s carnage in Chinese markets today. These four charts show just how ugly it’s getting. 🧵 1/5
Chinese stocks listed in Hong Kong had their worst day since the global financial crisis. Concerns over Beijing’s close relationship with Russia and renewed regulatory risks sparked panic selling. 2/5

bloomberg.com/news/articles/… via @JeannyYu @CharlotteYTYang
Only a year ago Chinese stocks in the U.S. were enjoying an unprecedented boom. Now they’re mired in a 72% plunge within spitting distance of the Nasdaq’s 78% peak-to-trough slump during early 2000s dot-com bust. 3/5

bloomberg.com/news/articles/… via @frostyhk
Read 5 tweets
Rebecca Choong Wilkins 钟碧琪 Profile picture
Mar 8
China’s property crisis is spilling over to some of its stronger builders, leaving investors with even fewer places to hide.

Analysts are warning of an “unstoppable downward spiral.” 1/5

Read my latest breakdown in Bloomberg’s China credit tracker 👇
bloomberg.com/graphics/china…
China’s developers have been rocked by at least 14 defaults since authorities began cracking down on the housing market in 2020.

Authorities are allowing selective policy relief but that’s had very little effect on credit markets. 2/5
Traders betting on better times ahead for China property are in a difficult position now that builders once shielded from the wild swings look increasingly vulnerable. (Made worse by global risk-off following the invasion of Ukraine.)

That’s keeping stress elevated offshore 3/5
Read 6 tweets
Rebecca Choong Wilkins 钟碧琪 Profile picture
Mar 7
This is what the NPC means for China's beleaguered property sector. A🧵

TLDR: No turnaround for developers. This is about limiting the fallout of the crisis: boosting growth, supporting local govts, encouraging state-led projects, reducing systemic risks as defaults rise. 1/10
TOP LEVEL: China’s ambitious 5.5% growth target suggests more stimulus is on the way. Ultimately accommodating monetary/credit/fiscal policies are about stabilizing growth. Not reversing the clampdown on developer debt. 2/10
bloomberg.com/news/articles/…
LOCAL GOVERNMENT: Local govts are getting more cash: transfer payments to local govts will jump 18% vs last year. That'll help make up for falling land sales.

Inexpedient to allow the first default of a public LGFV bond, but don't rule it out, finances remain precarious. 3/10
Read 10 tweets
Rebecca Choong Wilkins 钟碧琪 Profile picture
Jan 8
China’s property crisis is going to get much worse before it gets better. A 🧵.

The debt crunch at ‘better’ firms like Shimao is key signal of what’s to come, even now that massive uncertainties like Evergrande and Kaisa defaults are out of the way. 1/8
TLDR on China's property crisis: 2022 is not just going to be about how much property firms owe in debt – but who OWNS that debt. 2/8
As the economy slows, the property crackdown rolls on and the network of real estate trusts, weaker banks/FIs, suppliers, contractors, workers etc all suffer – there’s going to be a lot less willingness to grant property firms a break when they get behind on payments. 3/8
Read 8 tweets

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