A Hong Kong court ordered the liquidation of China Evergrande, the world’s most indebted property developer.

Evergrande has assets of about $245 billion, but owes about $300 billion.

Its demise is a “controlled collapse,” but still raises systemic risk and will hurt investors, says an analyst.

  • Crackhappy@lemmy.world
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    10 months ago

    I am somewhat concerned about the global implications of this. Evergrande is a symptom of a deeper malaise in the Chinese real estate market.

    • partial_accumen@lemmy.world
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      10 months ago

      is a symptom of a deeper malaise in the Chinese real estate market.

      Its even worse than that because retail investors in China use real estate as their primary investment vehicle. Where as someone in the USA might put money in a 401k for retirement or a brokerage account for investing, those don’t exist (in the reliable way) in China. So many regular people’s nest egg is tied up in real estate. So this isn’t just the real estate market getting wiped out, its millions of working class people’s life savings just evaporated.

      • Burn_The_Right@lemmy.world
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        10 months ago

        Goddamn. Thanks for the perspective. This is much more horrible than I thought. It sounds like vulnerable working class people are going to be hurt the worst.

      • Jaytreeman@kbin.social
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        10 months ago

        Not just a China thing. Canada is absolutely fucked with the government floundering to try and keep house prices from falling

        • partial_accumen@lemmy.world
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          10 months ago

          Correct me if I’m wrong. I know that Canadian home prices are bonkers, especially in large cities like Vancouver or anywhere in the GTA (are the Quebecois also having this trouble?). However, the problem with Evergrande isn’t just failure of this company reduces home prices (which is where lots of Canadian savings resides), but Evergrande had taken deposits for tens of thousands of homes it never built or never completed.

          So while the value/sale price of a home in Canada may be falling. At the end of the day it still does have value monetarily, and still serves a vital function of housing a family.

          China’s situation with Evergrande means the money paid for the house by the owner simply evaporated with no possibility of a refund and the house doesn’t exist because it was never built (or never completed). So to me the China situation looks significantly more dire.

          • Sagifurius@lemm.ee
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            10 months ago

            Nah, they way things are, if the canadian housing market falls, the whole economy will shit the bed. The GDP is currently driven by the housing market, the nations finances are literally built on a house of cards.

    • Hacksaw@lemmy.ca
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      10 months ago

      That’s the problem with investors, if they’re not making more money than last year they find a way to fuck the rest of us. Either they pressure companies to lay off workers, they pressure the government to cut taxes, lower pesky labour and environmental regulations, or just handover cash in the form of a subsidy or bailout.

      Either way they get our money somehow and enshittify our lives. If there’s no hell we’ll need to invent a special kind of justice for these people.

      • 🇰 🌀 🇱 🇦 🇳 🇦 🇰 ℹ️@yiffit.net
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        10 months ago

        I don’t know if I can really blame the investors themselves for enshittification… I mean, sure, it’s done for their sake but is it their call? They want a return on the investment, but how much say do they have in the companies that actually do the shitty things?

        Then again if I gave money to someone and said “go bring me some milk” and they got me milk, but also murdered everyone they saw along the way, I would definitely not be hiring them again and probably could be in trouble despite not asking for or wanting the murders. If the investors don’t pull out when the company is doing shitty things to make them money, they are definitely evil themselves.

        • piecat@lemmy.world
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          10 months ago

          Fiduciary responsibility. Shareholders/investors can, have, and will, sue.

          That’s where the primary focus is supposed to lie. Legally anyway.

          If selling all the assets and firing all the people could increase the share price for a quarter, they’ll do it.

        • Hacksaw@lemmy.ca
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          10 months ago

          Sorry I was just watching a video that was explaining that most companies are run by a handful of people who basically each represent several of the largest shareholders combined. I suppose I was imagining these people making the actual decisions and hiring the board and pushing the direction of the company and the lobbying efforts as the “investors”.

          You’re right I don’t mean we should commit war crimes against grandpa because he has a pension fund lol

    • ilinamorato@lemmy.world
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      10 months ago

      Probably won’t hurt the investors, they’ll get paid. But all the individual contractors who worked for the company are very unlikely to actually see payment.

    • frezik@midwest.social
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      10 months ago

      The company owes $300B on $245B of assets. Unsecured creditors are among the last on the list to be paid back, and at least some of those are contractors who did work for the company and haven’t been paid yet.

    • BigDill99@lemmy.ca
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      10 months ago

      Hurts the customers, like lower-middle class people that put their life savings down to buy a home and never got one.

    • rbesfe@lemmy.ca
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      10 months ago

      “investors” in this case include middle class Chinese citizens, I think that’s worth caring about

  • halcyoncmdr@lemmy.world
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    10 months ago

    The chickens are finally coming home to roost with the decades of bullshit in commercial real estate worldwide without proper regulation. This isn’t unexpected to anyone with half a brain looking at the industry, which means it obviously completely blindsides major institutional investors who never even consider anything more than quarterly numbers in a vacuum. The pandemic exposed the systemic issues so quickly they couldn’t just brush it under a rug with misinformation.

    • Wanderer@lemm.ee
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      10 months ago

      I’m not saying it’s ideal or healthy.

      But I don’t see how the west would have an upcoming issue with real estate.

      People are still willing to pay increasingly large amounts of money for real estate and when locals can’t afford it they just bring in immigrants.

      I’d be interested to know how the real estate valuation in the west is going to decrease.

      • Nahodyashka@lemmy.world
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        10 months ago

        I have a feeling that “too big to fail” will continue to be the mantra in the west for bailing these institutions out.

        • Wanderer@lemm.ee
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          10 months ago

          They got given loans that they had to pay back with interest.

          But I don’t see how the west are going to fail. What’s happening in China is different to the west

    • Hamartiogonic@sopuli.xyz
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      10 months ago

      Considering quarterly numbers in a vacuum… sounds strangely familiar. Feels like we’ve done this many times before, but we still keep on repeating the same mistakes.

  • merthyr1831@lemmy.world
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    10 months ago

    The thing with debt is that every time someone (or something) that owes a world-changing amount of it suddenly goes kaput, it becomes pretty clear how much of the debt system is made up.

    If Evergrande owes banks, they’ll just write off the debts and pretend it never existed. If they owed companies, they’ll recoup “lost” money from assets and loans from someone else.

    Most of the debt system is arbitrary and totally nonexistent. This wont be the collapse of the chinese economy like ““china waters”” claimed it would be; for a capitalist country masquerading as a classless economic system they’re doing capitalism a lot better than most of the world right now.

  • rekabis@lemmy.ca
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    10 months ago

    and will hurt investors

    breaks out world’s tiniest violin

    Investors can go suck it, I’m in the corner of the working class.

    • trolololol@lemmy.world
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      10 months ago

      Even here the system will be rigged in favor of big investors vs small investors vs people who bought an asset and will get squat. Because working class who gave them money upfront to purchase an appt or house will be the last one in the collectors queue.

      But your response is accurate to the “claim” that investors will be hurt. Media is so messed up that they don’t even mention the customers that will get the worse impact than investors.

    • DdCno1@kbin.social
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      10 months ago

      I don’t think you quite understand that in this case, it’s millions upon millions of working and middle class people who put most of their life’s savings into this.

    • CaptainProton@lemmy.world
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      10 months ago

      That’s literally what the return on all the other investment is for: the assumption of risk.

      I guess it’s the same shift in mentality as the credit card processing machine asking for a tip for everything by default.

  • Rooskie91@discuss.online
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    10 months ago

    Oh boohoo, did someone who enthusiasticly supports capitalism play and loose? Good, welcome to the extreme shittiness of a global free market.

    • Sagifurius@lemm.ee
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      10 months ago

      You know, sometimes it’s really obvious when a person is a broke ass jealous loser.

          • Aleric@lemmy.world
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            10 months ago

            That’s pretty funny coming from the guy whose comment history is primarily room temperature IQ hot takes and telling people exasperated by your dimness to fuck off. It’s sadly common to encounter stupid, angry people online, but your dedication to the art puts you at least five short buses ahead of your peers.

          • Clent@lemmy.world
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            10 months ago

            I have more than 5 bucks. I don’t see anything wrong with being happy that is hurting the wealthy.

            The idea that this is hurting the little guy more than the wealthy is clickbait nonsense.

            Any sane person has their retirement diversified and uses index funds.

            You sound like a wannabe day trader; a temporarily embarrassed millionaire.

      • Rooskie91@discuss.online
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        10 months ago

        Oh no! I’ve been discovered! 😭🥲 Please tell me how I can be cool and feel good about myself making fun of people on the internet?

    • SatanicNotMessianic@lemmy.ml
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      10 months ago

      Probably not very much.

      1. Unless I’m mistaken this is a Chinese company trading on the Chinese market. Unless someone was specifically looking to be in the Chinese real estate market (which was very hot about a decade ago iirc), they wouldn’t have a lot of exposure. I think the Chinese market has been in the shitter recently, so I’m not sure who’s holding them right now
      2. Retirement funds (pension funds and 401k target date funds, which is where most of the money is these days I believe) skew very conservatively. They spread their money across markets (so like 5% tech, 8% utilities, 7% municipal bonds, whatever). They might have a chunk in a bucket of “foreign” markets, but even those would be spread across multiple industries. I’d be surprised if any of those funds had more than a fraction of a percent in a single company like this.
      3. Target date funds get their name from the fact that they’re investing with the expectation that you’ll retire at 65, and the closer that date gets, the more conservative the investments become. People who are retiring soon will have even less exposure to this, and people who are retiring in 20 years will never know this happened.

      The real question is whether there’s going to be a ripple effect but it’s not looking like that yet.

      • ralphio@lemmy.world
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        10 months ago

        It trades on Hong Kong Stock Ex so not a traditional Chinese market, but technically a Chinese one nonetheless. Honestly considering how many tech stocks are traded in retirement funds today, Evergrande probably once seemed like a relatively conservative investment.

        Rule of thumb is about 1/3 go to foreign investment for a typical retirement account in the US. But you’re right, it should be a very small part of the average portfolio.

    • ralphio@lemmy.world
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      10 months ago

      Yes, both stock and bonds. But the stock and bonds have been trading near zero for a couple years so the damage was done in '21.

  • ReallyKinda@kbin.social
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    10 months ago

    They should start a couple utopian city experiments in those ghost suburbs they built way outside cities. Offer housing and a vision and put some academics in charge so we can learn something.

    • DdCno1@kbin.social
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      10 months ago

      The problem is that those ghost cities aren’t actual cities. The housing is largely worthless and uninhabitable, crumbling before it’s even finished, often only “finished” to look that way from afar. You can’t actually do anything with it other than tear it down.

      • ReallyKinda@kbin.social
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        10 months ago

        It looks to me like there are a fair amount of finished homes with fine construction that are vacant due to this whole thing. Many weren’t completed but many were.

        • DdCno1@kbin.social
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          10 months ago

          Fine construction? Based on what? Have you actually seen these ghost cities? There is nothing fine about them.

          • ReallyKinda@kbin.social
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            10 months ago

            Based on scanning wiki and a couple articles and seeing nothing about construction quality aside from unfinished projects, definitely not an authority

      • ReallyKinda@kbin.social
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        10 months ago

        Oh I see, didn’t realize the construction quality was terrible:( So it was a sham the whole time? I thought they just didn’t think through the locations which made the housing useless (no work within reasonable commute).

        • The Snark Urge@lemmy.world
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          10 months ago

          The whole thing was essentially a real estate Ponzi scheme where new investors were paying for pre-existing work, from what I’ve read

          • DaDragon@kbin.social
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            10 months ago

            New investors were covering existing loans you mean!
            No Ponzi scheme here, nothing of the sort. Just good old economics!

            But yes, they sold apartments and used the proceeds to finance existing, already sold buildings that weren’t built yet.

    • Burn_The_Right@lemmy.world
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      10 months ago

      Think of how U.S. conservatives are disgusted by any idea of a progressive experiment. That is how the conservative Chinese gov’t would respond as well.

  • AutoTL;DR@lemmings.worldB
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    10 months ago

    This is the best summary I could come up with:


    But there are still concerns about how Evergrande’s fallout will affect the broader market, since the property sector contributes to about one-quarter of China’s GDP.

    The court has appointed Alvarez and Marsal as liquidator to manage the company, Evergrande said in a filing to the Hong Kong Stock Exchange.

    “Onshore stakeholders are busy working to ensure home purchasers will eventually receive the homes they have paid for one way or another, but retail ‘mom and pop’ investors in the company’s offshore securities will be facing even further uncertainty and delay which would likely continue for years,” Daniel Margulies, a partner at Dechert, a law firm that specializes in restructuring in Asia, told BI.

    In July, Evergrande cited an analysis by Deloitte that estimated a recovery rate of 3.4% on its debt if the company is liquidated, per Reuters.

    Debtwire data showed 32 developers in China managed to complete 42 restructuring processes covering 104 tranches of offshore bonds worth $33.1 billion from July 2021 — around the time the current property crisis started — to the end of October 2023.

    “Evergrande’s liquidation is a sign that China is willing to go to extreme ends to quell the property bubble,” Andrew Collier, a managing director at Orient Capital Research, told Reuters.


    The original article contains 1,049 words, the summary contains 209 words. Saved 80%. I’m a bot and I’m open source!

  • driving_crooner@lemmy.eco.br
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    10 months ago

    Let’s see if China have a capitalism with American characteristics and is going to rescue the company with public money, or if they’re going with a more theorical one and left it going broke.

    • Sanctus@lemmy.world
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      10 months ago

      Thats not what liquidation means.

      To turn over to a trustee one’s assets and accounts, in order that the several amounts of one’s indebtedness may be authoritatively ascertained, and that the assets may be applied toward their discharge.

      In America, the company would be handed a fat check.