China: The impact of the real estate crisis on the markets.  New Lehman Case?

China: The impact of the real estate crisis on the markets. New Lehman Case?

Some have gone so far as to define it as “lehman moment“What is happening Sugar In recent times, fear of contagion From the crisis in the real estate sector to the entire economy of another world power, which had a devastating effect on global financial markets. There are many open fronts and the past week has been tumultuous for investors around the world, grappling with new concerns every day: from turmoil in the Chinese real estate sector to fears for the stability of the country’s most important shadow till. From rumors about direct intervention by authorities in the financial markets to the banking system, reform plans by some important regulatory authorities.

real estate sector

On the real estate front, on Monday – following suspension of trading in some of its bonds – shares of rustic gardenA property development company, fell to an all-time low. The company is on the verge of default and must make certain interest payments on dollar bonds within the classic 30 days, on which Guilty Since last 6th August.

Friday EvergreenThe world’s most leveraged real estate giant calls for Chapter 15 Bankruptcy Code in the United States for protection from creditors. The move, which is not unusual in international restructuring deals, protects the group from creditors in the United States as it works on a global deal.

The two are among the most prominent of the troubled real estate companies in the country: 18 of the 38 building companies listed on Chinese exchanges have reported, according to Bloomberg’s count. loss in the first six months of the yearOne number up from 2022.

shadow banking system

In another sign of the real estate sector’s debt problems, several publicly traded companies have reported failure to receive certain payments Dues to group companies Zhongzi Enterprise, The liquidity crisis could risk generating negative effects on the traditional banking system, given the large size of the shadow banking system (i.e. the complex of markets, institutions and intermediaries that provide banking services without being subject to relative regulation because they are located outside scope of application of the relevant rules).

central bank moves

On the currency front, Friday morning People’s Bank of China – or the country’s central bank – has established a Correcting Sul Cambio USD/CNY at 7.2006, which was the largest margin in favor of the national currency since the survey began in 2018, compared to a consensus of 7.3065.

“The PBOC’s move comes after rumors that Chinese authorities have State banks asked to increase intervention on yuan To reduce forex volatility – ING analysts pointed out – we may also see a cut in forex reserve requirements, often seen as a tool to avoid a sharp depreciation of the CNY.

The previous day, PBOC itself announced that it intends to “adapt, adapt and adapt to the new situation of major changes in the relationship between supply and demand in the real estate market”. Customize real estate policies instantly and fostering the stable and healthy development of the real estate market”. The quarterly report on monetary policy said the central bank will step up its support to the economy as domestic demand weakens and businesses struggle, and so it Says it is ready to increase financial support for affordable housing for low-income residents in Chinese cities.

Market Authority Schemes

finally on friday China Securities Regulatory Commission (CSRC) – or the Chinese Financial Market Regulatory Authority – presented a series Measures to revive the stock market, following a request from the Politburo last month. Besides the need for “vigorous development” of equity funds, he indicated a desire to reduce trading costs, support share buyback and dividend distribution by listed companies, and introduce long-term equity instruments.





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