The Chinese Evergrande is to be liquidated

Hello,

something about the real estate boom as we would not want it here with us in this form:

The Chinese Evergrande Group, formerly Hengda Group, based in Shenzhen (Guangdong) was recently the second largest real estate company in China measured by revenue. It developed and sold apartments mainly to residents with middle and higher incomes. In mid-2021, the company got into trouble due to high debt: at the end of June 2021, the company had liabilities of around 1.96 trillion Renminbi (252.5 billion euros). In August 2023, Evergrande applied for creditor protection in the USA under Article 15 of the US Bankruptcy Code. At the end of January 2024, a court in Hong Kong ordered the liquidation of the company.

My question now is, will that drag Europe and of course Germany into the abyss? With Country Garden, the largest real estate group in China itself is also deeply mired in debt. What if that one also goes bust?

What do you think?

My question now is, will this drag Europe and thus of course Germany into the abyss? Even the largest real estate group in China, Country Garden, is deeply stuck in a debt swamp. What if it also goes bust?

This has no impact on the rest of the world. Some investors will feel some pain, but overall it is purely an internal Chinese and self-inflicted problem. The government is already diligently counteracting it. We can all remain completely relaxed.

This has no impact on the rest of the world. Some investors will feel a bit of pain, but overall it is purely an internal Chinese and home-made problem. The government is already actively countering it. We can all be quite relaxed about it.

I wouldn’t want to sign off on that. Countless foreign investors are affected. For example, the American Black Rock, HSBC, just to name two giants.

I wouldn't want to sign off on that. Countless foreign investors are affected. For example, the American Black Rock, HSBC, to name just two giants.

Source? It would be new to me that Black Rock is involved in Evergrande. Maybe indirectly and with smaller amounts...

Source? It would be new to me that Black Rock is involved in Evergrande. Maybe through five degrees and with smaller amounts..

I saw it on Deutsche Welle: youtube.com/watch?v=6ExkvqyngoA&t=198s&ab_channel=DWDeutsch

I wouldn't want to sign off on that. Countless foreign investors are affected. For example, the American Black Rock, HSBC, to name just two giants.

Of the total debt at Evergrande (approx. 330-335 billion USD), about 5% is outstanding with foreign funds and banks (+/- 20 billion USD). That is manageable. Furthermore, the default already occurred in 2021 when foreign debts could not be serviced. From then on, appropriate write-downs had to be made. And since, according to Chinese law, simply put, foreign creditors are only compensated after the last bill for the janitor and cleaning lady (from the liquidation proceeds), the write-downs on foreign creditors should have been more or less fully processed (they also have to be according to IFRS, if I’m not mistaken). Otherwise, I once read the number of 4,000 creditors in China.