Quote:
Originally Posted by Drewski Canuck
I have been to China twice and Hong Kong twice.
In 2015 - 2016, China saw massive stock value loss of 30 % or more. Many companies were essentially purchased by the Government of China which applied money from its balance of trade surplus to prop up its Stock Markets.
Many of those companies were Real Estate Companies.
Last time we visited China, we were on a bullet train doing 280 km / hr from Shanghai to Xian. In 20 minutes I counted on ONE SIDE of the train, over 15 unfinished cities. There were over 100 idled construction "red lion" cranes on 40 - 60 story buildings, with Residential Apartments of 30 + stories, unfinished, with unfinished freeways, roads, and train stations. Most of the Buildings had NO windows installed, and were abandoned.
No work was being done at all in these insta - cities. How many trillions was wasted on that exercise?
I seriously doubt that the collapse of one company today will have a bigger impact than when 1400 + Companies requested Stop Trade Orders from the Shanghai Stock Exchange in 2015 & 2016.
The Chinese Government was forced to "buy the board" to stop a complete collapse of its economy. I expect that they will do so again.
Hopefully, enough European banks and North American banks exited China's Bond Markets before this hit China so the impact will be negligible.
Drewski
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its all about debt and there was plenty of cheap money especially from overseas export and local goverment in the pass 20 years, now the chicken coming home. Real estate company are piling on debt to finance these construction projects and many just goes bust as mention in these ghost citys , in the end these borrowed cash still went to the upper management/politician pockets. The bank sold these debt as wealth product to unsuspecting investers they are now left holding the bag . majority if not all wealth/investment option in china are tied to real estate. its like a person that put all their 30+ years of rrsp and saving into 1 single stock, the fallout in this case nortel stocks ...