Evergrande is a real-estate developer from China that has $3...
$中国恒大(ADR)(EGRNY.US$ Evergrande is a real-estate developer from China that has $305 billion of liabilities and cannot pay of their debt.
There are 3 possible outcomes here:
(1) Chinese government bails them out; (2) Chinese government step in; (3) Full collapse.
(1) Chinese government bails them out; (2) Chinese government step in; (3) Full collapse.
(1) I think this is unlikely as there are too many real-estate companies in financial difficulties right now to bail all of them out successfully.
(2) I believe this is the most likely scenario, but that would transfer the burden onto banks as they will not be getting repayments for their loans to Evergrande.
(3) Unlikely for now but could happen if scenario (2) goes badly. If so, the entire Chinese market will be bearish.
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Ardene : I've been getting ready for this for a while now.
My strategy is innovative as well as ambitious.
I'll do absolutely nothing.
Palmyra : If they step in, they’re basically signalling to their investors that it’s okay to take miscalculated risks with their investment and bubbles are fine, papa will back you up. Probably not the right signal you want to send to your people.
AKA大马彭于Ya : At the end of the day, the Chinese government should have to step in. If Evergrande goes out of business, it will have a huge impact on many buyers of their homes and financial products, as well as upstream and downstream suppliers and banks that lend to it, triggering social unrest, and causing another wave of economic impact.