CNBC’s “Squawk Field” crew discusses China’s Evergrande and the attainable to affect international economic system with Jeffery Harte, senior analysis analyst at Piper Sandler. For entry to stay and unique video from CNBC subscribe to CNBC PRO:
The Chinese language authorities shouldn’t be prone to step in to provide direct assist to debt-ridden developer China Evergrande Group, based on S&P World Scores.
“We don’t count on the federal government to offer any direct assist to Evergrande,” stated the S&P credit score analysts in a Monday report. “We consider Beijing would solely be compelled to step in if there’s a far-reaching contagion inflicting a number of main builders to fail and posing systemic dangers to the economic system.”
“Evergrande failing alone would unlikely lead to such a state of affairs,” they added.
Fears over a possible contagion from Evergrande into the broader Chinese language economic system and past dragged down the Grasp Seng index in Hong Kong by greater than 3% on Monday. The sell-off continued throughout the globe.
Evergrande is the world’s most indebted developer and has racked up about $300 billion in debt. It is because of make plenty of curiosity funds for its bonds beginning Thursday. S&P stated a “default is probably going” on these funds.
“We consider the Chinese language banking sector can digest an Evergrande default with no important disruption, though we shall be aware of potential knock-on results,” S&P stated.
In Tuesday morning commerce, shares of Evergrande in Hong Kong fell about 4% — its seventh straight session of declines, although far lower than the over 10% decline on Monday.
Evergrande’s chairman tried to reassure markets on Tuesday, and stated the agency will fulfill its duties to property patrons, traders, companions and monetary establishments, Reuters reported Tuesday citing native media.
‘Not too massive to fail’
S&P analysts likened the Evergrande fallout to the case of Chinese language dangerous debt supervisor Huarong, which sparked a market rout earlier this yr when it didn’t report earnings on time and its U.S. dollar-denominated bonds plunged.
“We don’t count on authorities actions to assist Evergrande until systemic stability is in danger,” S&P stated. “A authorities bailout would undermine the marketing campaign to instill higher monetary self-discipline within the property sector.”
As a substitute of a bailout, Beijing may facilitate negotiations negotiations and funding to make sure particular person traders and homebuyers are “protected as a lot as attainable,” the analysts stated.
“The federal government is keen to assist, but in addition needs occasions to take their course. Even in Evergrande’s residence province, the developer is insignificant to Guangdong’s huge native economic system — it isn’t too massive to fail.”
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Flood of retirees for the next two decades will try to unlock the equity in their real estate for retirement income. Given China's demographics there appears to be a prolonged lack of demand. Are you telling me there will be no contagion? No government has the means to cover this over the long run.
Lol bear sterns is safe!
Remind me of Bear Stern, Bear is solvent, Bear Stern has good long history etc..
All I heard was I'm gonna stick my head in the sand and pretend nothing bad is going to happen.
I love capitalist on tv begging for socialist interventions. SCUM
If the CNBC official narrative schill says sonething you can bet that the opposite is true.
Direct exposure to Eveegrqnde by the U.S. through funds and ETFs is HUGE!!!!!!
Most debt is Yuan denominated, their central bank can absorb that. The USD debt will get rinsed, debt and equity holders will generally take the hit. Home buyers who prefunded with upfront deposit will be protected.
Totally screwed if you are an employee of Evergrande who prefunded in one of their new development under construction, invested in wealth management products linked to evergrande debt, and rely on them paying your salary. Then RIP.
Even fed meeting is over reaction because we already know whats coming!!!!!
Evergrande is just a beginning of hiccups. Xi is unconsciously building long term chronic and accumulating risk till his death. Making fortune in China would become just fantasy in Xi’s era.
Evergrande is just the beginning. Many more like that in China. You'll be a fool to believe that the CCP is transparent on this issue.
They always argue from the side that US investors are not as much invested in the Chinese market (which is not true by the way). However, they never mention that Chinese investors are heavily invested in US (and global) assets … once they need liquidity, they will also pull out their investments and a broad range of assets in the US/EU market will drop drastically in price, which then leads to a downwards spiral.
What crashed the US lehman bros was stupidity, which china and the US have plenty of, this will be worse… all the experts said dont worry, people claim china can handle it because its an economic dictatorship but the US barily avoided disaster with many authoritarian moves to save us (we didnt just let it happen capitalistically)… king xi doesnt understand this force of nature thats gonna hit him, when a real estate company with 300 bil in debt defaults, millions of people lose their savings their income and possibly house, ALSO this crash of such a huge company crashes the value of its stock, which banks are forced to hold for etfs, banks are also leveraged, if this thing defaults a major chinese bank it will cause bank defaults all over the world, a domino crash
“The subprime risk is contained” no worries 🙂
As far back as 2008, Corporate America's excuse for "We need a bailout" is "If we go down, we will take down the middle class with us." If Evergrande gets no bailout and there's no doomsday event for the Chinese middle class, it's going to be hard to justify any future bailouts in the US. Especially since America is currently undergoing our largest boom, which history has proven will inevitably lead to our largest bust.
make the US financial industry going on, by any means, even playing the "It's all fine" plot. That's the order.
Lol exactly it’s not even that big of a company even in chinas trillion dollar real estate market they’ll probably just use it as a chance to reform the market even if may don’t want it too cause the market is too hot but too much construction but not that much cause they still have to move like 600 million people into 3-4 tier cities so it’s not that big of a deal globally
30B of exposure in US markets China already injected 130B into Chinese economy. This is an overreaction and buying opportunity. Thanks China for the cheap stonks!
I can tell this guy knows nothing.
Lehman was just in Real estate where evergrande is in everything with many many investors, China and abroad.
Evergrande is also in the reverse repos, cryptos, music, sports, banks and so on.
China is cracking down on wealth gaps and for them to bailout evergrande would make them look like hypocrites.
Translation: Calm down guys and continue buying while we trim our positions. These guys advise to buy bank shares in August. Bunch of clowns.
You can tell hes being forced to say this
Evergrande owns 220B in assets, this is just FUD, buying the dip
Didn’t someone said that about COVID-19? 😆
Stalling the effects of worldwide economic downturn
is possible due to huge amounts of disposable income
in some folks accounts…..
How long they choose to stimulate Markets
is up to them.
The ability of a consumer driven Marketplace
to sustain actual participation in spending
might need real
human participation.
When a plane is about to crash and the pilot asks you to keep your head down.
Same thing they said about housing market before the crash.
Instead of talking about Evergrande, look how massive the US equity bubble is.
Oh CNBC and their terrorism. Pretty sad to see guys in suits making sure you keep your high-vis working for them while you’re praying to get a somewhat clean porta potty if you’re lucky…
Change is coming to America and the world. Do.not. Forget.. they may be able to manipulate the news, but they can’t change your memory… at least not yet.
The first step of any crisis is the denial that there is a crisis. We are following the script perfectly.
This green day is so banks and hedge funds can dump. Don't believe these guys.
The thirteen day rocketcrisis wasn't a surprise either and the world nearly came to an end.
Nice job Intellectwebs I got it again
Nice job Intellectwebs I got it again
china gov wants low priced houses ,figure it out
It's low risk from the people who didn't notice this until yesterday.
It's not low risk, we've seen these warning signs for over a year.
Evergrande is just the tip of the iceberg for China, must bigger problems will be coming from China.
I can see a bunch of short-selling boys are in panic mode haha
My reading of the tea leaves is that the $310 billion is what they are telling us at this time. Once the auditors go in, and those that have bonds and other securities against property start comparing notes, what are the odds of multiple properties being secured to multiple guarantees, across multiple lenders? My thinking is that this could scare $1 trillion.
Those that are suppliers, they may be lucky to get a few cents in the RMB for their outstanding debt. Should those companies go out of business, are there other suppliers to step in to keep supplying other builders? Could it be that the dominos fall from the supply side, rather than the financial side in this case?
Citi group may not have direct exposure to Evergrande, but Citi group's clients definitely do have exposure… same with other investment banks in the UK, US, EU and Japan.
Analysts? Uhh…that’s what they do for living. JPN top loosers y’day Nippon paint, ToTo, Daikin. I see iPhone sales drop, Merc drop, Ferrari drop, Hermes drop, Playstation drop, Range Rover drop, Bombadier drop lol….these r produced in G7 economy. Yea, no contagion 😄
The loaf of bread only has one mold spore. Everything is fine.
During COVID time last year, they said we will be ok here in the US. Ya’ll already know how that went.
The United States Federal Corporation and it Multinational Corporations are mentality sociopath's it makes one wonder which country is capitalist.
No company is too big to fail, every company should be held accountable for consequences of their actions.
Hong Kong developer Sunac has 9 billion in assets and 143 billion of debt
Short TSLA
Nice video, Trading with an expert in the field is the best, have been making a huge returns from my investment since I met Greg Buch one of the best in crypto currency investment.