ALERT Clif High: Evergrande has defaulted, taken over by the CCP

The Snack Artist

Membership Revoked
I'm wondering what amount of derivatives this will trigger. It COULD lead to a cascading effect bringing the whole world with it. This is one reason Greece wasn't allowed to default. Also why the Scots remain in the U.K. The Brits need the Scottish oil to back up their derivatives. Otherwise their bonds, etc, are junk status.

The word on the street at the time was that if Greece went TU, it would trigger defaults the like that had never been seen before. They had zero idea of what was out there as in derivatives. (ok, their guess was somewhere in the 3-10 trillion range)

Or, You can have the jynese taking all of your assets. See Afreeka. The EU tried this with Greece and the Greeks told them to pound sand if I remember correctly.
 
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Heliobas Disciple

TB Fanatic
Not trying to debunk Clif, he may have more inside information than what is available on line at the moment, but from what is available on line, I am not finding any indication of this being the case.

EDITED TO ADD: I think I'm changing my mind (that they will default after all). See post I am making a few hours later below.


China Braces for Evergrande Restructuring After Months of Tumult
Bloomberg News
December 5, 2021, 5:26 AM EST
  • Developer says it will ‘actively engage’ with creditors
  • Chinese authorities try to head off concerns about contagion
China Evergrande Group’s long-awaited debt restructuring may finally be at hand, posing a fresh test for Xi Jinping’s government as it tries to rein in the country’s financial excesses without derailing economic growth.

The embattled developer said in an exchange filing late Friday that it plans to “actively engage” with offshore creditors on a restructuring plan, offering its most explicit acknowledgment yet that its $300 billion of overseas and local liabilities have become unsustainable.

A barrage of statements from Chinese regulators -- several of which landed just minutes after Evergrande’s announcement -- suggested authorities are striving to contain the fallout on financial markets and homeowners rather than orchestrate a bailout.

The government of Guangdong, the southern province where Evergrande is based, summoned founder Hui Ka Yan to express concern over the company’s announcement and said it would dispatch a team to the developer to ensure “normal” operations. The People’s Bank of China blamed Evergrande’s problems on the company’s “own poor management” and “reckless expansion.”

The flurry of activity follows several weeks of relative calm for Evergrande, which has been making last-minute payments on its dollar notes since late October at the urging of Beijing. Friday’s statements signal the world’s most indebted developer may struggle to make further payments within their grace periods, even after a spate of personal asset sales by Hui that appeared designed to help Evergrande meet its near-term debt obligations.

The company’s next test comes Monday. That’s when a 30-day grace period ends on two dollar bond interest payments that were initially due Nov. 6: a $41.9 million coupon for a note maturing in 2022 and $40.6 million of interest on a security due the following year. Both bonds were issued by unit Scenery Journey Ltd.

The question for global markets is whether Beijing can coordinate a restructuring without upending the broader real estate sector, which accounts for nearly a quarter of economic output. Policy makers have a history of abandoning efforts to rein in developers when the risks to growth mount, though Xi appears more determined than his predecessors to stamp out the moral hazard that allowed companies like Evergrande to expand so rapidly.

One risk is that Beijing may not have a full picture of how indebted Evergrande and its peers have become. The Shenzhen-based developer indicated in its exchange filing on Friday that it may not be able to fulfill its pledge to guarantee payment on a $260 million note issued by joint venture Jumbo Fortune Enterprises, an obligation that many Evergrande investors didn’t even know existed until a few months ago.

While it will be important to monitor how Evergrande’s restructuring progresses, the odds of renewed panic in Chinese credit markets are low, according to analysts at China International Capital Corp., one of the nation’s largest investment banks. Real estate companies with poor management and high financial risks will be “phased out,” but authorities are likely to ensure that higher-quality developers retain access to funding, CICC analysts Yan Xu and Eric Yu Zhang wrote in a report.

The fallout from Evergrande is likely to be “controlled within a relatively limited scope,” the analysts wrote.

Bond investors have been anticipating an Evergrande restructuring for months, with the company’s 2025 dollar notes trading below 30 cents since the end of September. An index of Chinese junk bonds slid for a third day on Friday, lifting the yields to 22%, though gains in investment-grade notes suggested bondholders have become more relaxed about the prospect of contagion than they were earlier this year.

Investors are increasingly differentiating between the weakest and strongest borrowers after China’s government took steps to mitigate the cash crunch for higher-rated developers in recent weeks. Apart from Evergrande, money managers are bracing for a potential default by Kaisa Group Holdings Ltd., which faces a $400 million bond maturity on Tuesday after failing to swap the notes for new ones due 18 months later.

For Evergrande, the next step may be to enter into an informal debt standstill as it continues to try to negotiate with creditors, according to Bloomberg Intelligence analyst Daniel Fan.

“Extension of maturities, based on sustainability of debt, would be likely,” he said. “One option to sweeten the process is to link some of the repayment to its offshore assets,” such as its Hong Kong-listed electric vehicle unit, Fan added.

Evergrande’s offshore creditors are widely expected to fall near the bottom of the priority list in a restructuring, behind nearly 1.6 million homeowners who gave the developer down payments on properties, local suppliers, Evergrande employees, and individual investors who bought wealth management and trust products tied to the company. Several Evergrande-linked WMPs and trusts have already defaulted, restructured or fallen behind on payments.
 
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Heliobas Disciple

TB Fanatic
More:

(fair use applies)

China makes key move to tackle Evergrande default
Xinhua | Updated: 2021-12-05 19:30

BEIJING -- A crucial step has been taken in addressing the recent default of property developer China Evergrande Group after Guangdong provincial government held a regulatory talk with its chairman and agreed to send a working group to the company.

The risk resolution arrangements are conducive to comprehensively reviewing Evergrande's debt scale and defusing risks, lowering uncertainties facing upstream and downstream firms and related real-estate companies, protecting the legitimate rights and interests of all parties and maintaining social stability, analysts said.

The provincial government of Guangdong in south China held a regulatory talk on Friday evening with Xu Jiayin, chairman of China Evergrande Group, and agreed to dispatch a working group to the company, at its request, following the property developer's filing to the Hong Kong Stock Exchange that it may be unable to continue to perform its financial obligations.

Later, China's regulatory authorities released several statements responding to the Evergrande default, saying it is an individual case and will pose little impact on the market.

They attributed Evergrande's risk to its mismanagement and blind expansion in diverse directions, noting that most property firms in China are focusing on and properly managing their main lines of business.

Overall, China's real-estate market has maintained sound development and the financing channels for real-estate firms in the bond market continue to operate in a smooth and orderly way, according to the regulators.

"Currently, the A-share market remains stable, resilient and active," said the China Securities Regulatory Commission (CSRC), stressing that the potential overflow effect of Evergrande's risks on the stability of China's capital markets is under control.

The steady recovery and sustained resilience of the Chinese economy, together with the efforts on ensuring the security of the country's financial system, will also lay a solid foundation for addressing financial risks caused by an individual case.

The CSRC said regulators will continue to maintain the effective fund-raising function of the exchange bond market, support the normal financing needs of private companies, especially private real-estate firms affected by recent risk events, and ensure smooth channels for bond financing.

Some private real-estate firms have started the issuance of corporate bonds and asset-backed securities, according to the securities regulator.

"The risks caused by a certain individual real-estate firm in the short term will not undermine the fund-raising function of the market for the medium and long run," said the People's Bank of China, the central bank, in its Friday statement.

Currently, Guangdong provincial government, other relevant local governments and agencies are guiding and urging Evergrande Group and its affiliates to resolve risks steadily and orderly, in accordance with laws and regulations, and to proactively resume and complete housing construction for delivery to buyers.

"The government's lawful participation will help to effectively control risks and losses and lower uncertainties in the process of risk resolution," said Liu Hongyu, a professor with Tsinghua University.

Liu expected that the risk resolution of the working group and related departments will be in accordance with law and market principles, and will follow international practices to handle the interests of home buyers and all investors in an open, transparent and fair manner.
 

Heliobas Disciple

TB Fanatic
Now this is a Chinese company who defaulted on their bonds today (Dec 5). Maybe someone got their wires crossed when reporting the info to Clif.

(fair use applies)

Sunshine 100 China Holdings defaults on SGX-listed bond payment
Sun, Dec 05, 2021
- 11:21 PM
Jude Chanjudechan

CHINESE developer Sunshine 100 China Holdings has defaulted on US$178.9 million of debt and interest payments due Sunday (Dec 5), as the direct fallout of the woes of property companies in China continues to impact investors in Singapore.

Sunshine 100 was due to repay the US$170 million of principal and US$8.9 million of interest on its 10.5 per cent senior notes due 2021, which is listed on the Singapore Exchange (SGX).

But in a bourse filing on Dec 5, the company said it is unable to meet its debt obligations on the bonds "owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry".

The default will also trigger cross default provisions under certain other debt instruments entered into by the company and its subsidiaries which may become immediately due and payable if the creditors choose to accelerate.

Sunshine 100 said that it has not received any notice by any creditors regarding action to accelerate.

The company in August suspended trading of its US$219.6 million 13 per cent senior green notes due 2022, which is also listed on the SGX.

This came after it defaulted on the repayment of US$50.9 million of principal and US$1.5 million of accrued interest under its Hong Kong-listed US$200 million 6.5 per cent convertible bonds due 2021.

The company said then that the default could trigger cross default provisions under certain other debt instruments entered into by the group that are listed on SGX. These include the 10.5 per cent senior notes due 2021 as well as the US$120 million 12 per cent senior notes due 2023.

Higher borrowing costs have struck indebted companies across the property development sector, which have led to a wave of defaults.

This comes amid ongoing fears that Chinese property giant China Evergrande Group could default on its liabilities.

Evergrande chairman Hui Ka Yan was summoned by authorities last Friday after it said there was "no guarantee that the group will have sufficient funds to continue to perform its financial obligations".

The company said it had received a demand under a US$260 million guarantee obligation and added that it may be unable to repay due to the China property sector's liquidity crisis.
 

SpokaneMan

Veteran Member
I originally brushed Clif High off when he started the Web Bots thing. Sure, the data sets were interesting and slightly woo, but now in recent times listening to several of his shows, I believe the guy is ultra intelligent, bordering on genius in a weird way. Many things if I recall came to fruition or are in the process of. I would pay attention.
 

EMICT

Veteran Member
A couple of segments that Heliobas 'didn't' highlight that feeds into Clif's assumptions.

...offering its most explicit acknowledgment yet that its $300 billion of overseas and local liabilities have become unsustainable.

Evergrande’s offshore creditors are widely expected to fall near the bottom of the priority list in a restructuring...
 
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Meemur

Voice on the Prairie / FJB!
Not trying to debunk Clif, he may have more inside information than what is available on line at the moment, but from what is available on line, I am not finding any indication of this being the case.

Cliff is rarely accurate: he has a lot more misses than hits. I'll be surprised if this is true.

It certainly has the potential to happen, but we will all know it. There won't be any hiding it.
 

All4liberty

Senior Member
Cliff is rarely accurate: he has a lot more misses than hits. I'll be surprised if this is true.

It certainly has the potential to happen, but we will all know it. There won't be any hiding it.
I think Cliff is one sharp mind. I think the data that he looks at is very subjective in how it is interpreted. So I guess it is misses in how well it shows up as actual events.
 

The Hammer

Has No Life - Lives on TB
Seems like the Chicoms would do all they could to prop it up. And even if it did default, I don't have any trouble seeing the MSM completely ignore it. Some, because they don't understand it and don't see the importance. Others, to prevent any jitters.
 

Heliobas Disciple

TB Fanatic
A couple of segments that Heliobas 'didn't' highlight that feeds into Clif's assumptions.

...offering its most explicit acknowledgment yet that its $300 billion of overseas and local liabilities have become unsustainable.

Evergrande’s offshore creditors are widely expected to fall near the bottom of the priority list in a restructuring...


Thank you for pointing that out. After re-reading the articles I posted and not only what you highlighted but other information in the articles as well, as well as reading the pdf they released Friday evening - I'm changing my mind. I think Evergrande is technically going to be in default, they're just hoping that their creditors will agree to work out a restructuring plan, but they have no guarantee that will happen and those articles are a lot of wishful thinking. On Clif's other point though I still see no indication that the CCP took over Evergrande. We'll have to wait and see on that part.

I tried to cut and paste the pdf file of their statement, it's best viewed at the link for proper formatting, etc. Highlighting is mine. (not from the pdf)

(fair use applies)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CHINA EVERGRANDE GROUP
(Incorporated in the Cayman Islands with limited liability)

INSIDE INFORMATION

This announcement is made by China Evergrande Group (the‘‘Company’’, together with its subsidiaries, the ‘‘Group’’) pursuant to Rule 13.09 of the Rules G overning the Listing of Securities on The Stock Exchange of Hong Kong Limited and Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Since September 2021, the Group has been diligently reviewing its capital structure and liquidity condition with the help of its financial and legal advisors, evaluating all available strategic options, and maintaining ongoing dialogue with offshore creditors. In light of the current liquidity status of the Group, there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations. The Group is taking a comprehensive view in assessing its overall financial condition, considering the interests of all stakeholders, upholding the principles of fairness and legality,and plans to actively engage with offshore creditors to formulate a viable restructuring plan of the Company’s offshore indebtedness for the benefit of all stakeholders.

As of the date of this announcement, the Company received a demand to perform its obligations under a guarantee in the amount of approximately US$260 million. In the event that the Group is unable to meet its guarantee obligations or certain other financial obligations , it may lead to creditors demanding acceleration of repayment. Shareholders of the Company and other investors are reminded to exercise caution when dealing in the securities of the Company.

By order of the Board China Evergrande Group
Hui Ka Yan Chairman

Hong Kong, 3 December 2021

As at the date of this announcement, the executive Directors are Mr. Hui Ka Yan, Mr. Xia Haijun, Mr. Shi Junping, Mr. Pan Darong, Mr. Huang Xiangui and Mr. Lai Lixin, and the independent non-executive Directors are Mr. Chau Shing Yim, David, Mr. He Qi and Ms. Xie Hongxi.
 

Lone_Hawk

Resident Spook
I'm wondering what amount of derivatives this will trigger. It COULD lead to a cascading effect bringing the whole world with it. This is one reason Greece wasn't allowed to default. Also why the Scots remain in the U.K. The Brits need the Scottish oil to back up their derivatives. Otherwise their bonds, etc, are junk status.

The word on the street at the time was that if Greece went TU, it would trigger defaults the like that had never been seen before. They had zero idea of what was out there as in derivatives. (ok, their guess was somewhere in the 3-10 trillion range)

Or, You can have the jynese taking all of your assets. See Afreeka. The EU tried this with Greece and the Greeks told them to pound sand if I remember correctly.

This is a black swan event in the financial markets.

Thank you for pointing that out. After re-reading the articles I posted and not only what you highlighted but other information in the articles as well, as well as reading the pdf they released Friday evening - I'm changing my mind. I think Evergrande is technically going to be in default, they're just hoping that their creditors will agree to work out a restructuring plan, but they have no guarantee that will happen and those articles are a lot of wishful thinking. On Clif's other point though I still see no indication that the CCP took over Evergrande. We'll have to wait and see on that part.

I tried to cut and paste the pdf file of their statement, it's best viewed at the link for proper formatting, etc. Highlighting is mine. (not from the pdf)

(fair use applies)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CHINA EVERGRANDE GROUP
(Incorporated in the Cayman Islands with limited liability)

INSIDE INFORMATION

This announcement is made by China Evergrande Group (the‘‘Company’’, together with its subsidiaries, the ‘‘Group’’) pursuant to Rule 13.09 of the Rules G overning the Listing of Securities on The Stock Exchange of Hong Kong Limited and Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Since September 2021, the Group has been diligently reviewing its capital structure and liquidity condition with the help of its financial and legal advisors, evaluating all available strategic options, and maintaining ongoing dialogue with offshore creditors. In light of the current liquidity status of the Group, there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations. The Group is taking a comprehensive view in assessing its overall financial condition, considering the interests of all stakeholders, upholding the principles of fairness and legality,and plans to actively engage with offshore creditors to formulate a viable restructuring plan of the Company’s offshore indebtedness for the benefit of all stakeholders.

As of the date of this announcement, the Company received a demand to perform its obligations under a guarantee in the amount of approximately US$260 million. In the event that the Group is unable to meet its guarantee obligations or certain other financial obligations , it may lead to creditors demanding acceleration of repayment. Shareholders of the Company and other investors are reminded to exercise caution when dealing in the securities of the Company.

By order of the Board China Evergrande Group
Hui Ka Yan Chairman

Hong Kong, 3 December 2021

As at the date of this announcement, the executive Directors are Mr. Hui Ka Yan, Mr. Xia Haijun, Mr. Shi Junping, Mr. Pan Darong, Mr. Huang Xiangui and Mr. Lai Lixin, and the independent non-executive Directors are Mr. Chau Shing Yim, David, Mr. He Qi and Ms. Xie Hongxi.

Yeah, they are going to try to talk their way out of this, but anyone who had half a brain has been headed for the exits for months...
 

FireDance

TB Fanatic
I don’t think Clif was coming from his data on this at all. I believe it was an observation he made and the backside of history he was talking about. Nothing else (as far as I could tell) was involved. If information is from a “data set” he will state it. He didn’t in this unless I just totally missed it. But those are rather hard to miss because: he will state it was from a “run” and then when the “run” was from and a time PERIOD he believes the run covers.

Hence, I believe this was all observational and had history tacked onto to point out what has happened in the recent past that is comparable to what may/may not happen with this particular screw up.

Please correct me if I’m wrong. No prob.
 

OldArcher

Has No Life - Lives on TB
Strange…
I had been under the impression that any Chinese organization, fund, or technology was ipso facto, CCP controlled. I know of no such organization that is NOT CCP controlled. Does anyone here?

OA
 

Doomer Doug

TB Fanatic
Old Archer, you are looking at either DIRECT People's Liberation Army control or direct Marxist control, since China doesn't really go for what we would call a private sector. I posted a thread that gives more of the details of the economic chaos.

Mods you can merge these two threads if you want. My thread was saying that Evergrande default, finally and officially is going to happen in a few hours. Evergrande has not made a payment for weeks now.

 

Vegas321

Live free and survive
Old Archer, you are looking at either DIRECT People's Liberation Army control or direct Marxist control, since China doesn't really go for what we would call a private sector. I posted a thread that gives more of the details of the economic chaos.

Mods you can merge these two threads if you want. My thread was saying that Evergrande default, finally and officially is going to happen in a few hours. Evergrande has not made a payment for weeks now.


Like in Zerohedge. 300 billion compared to 65 trillion. Small potatoes in the World today.
 

marsh

On TB every waking moment
I saw that another large Chinese RE firm was defaulting on foreign bonds, as well. Went back later to pick up the story and couldn't find it.

As Clif pointed out, a lot of investors hold these bonds to use as collateral for loans. That will gum things up, as well. He said that he thinks this will bring down both the Yuan and the petro-dollar. Expect both unobtanium and hyperinflation to result, as well as bank failures.

^^^^^^^^^^^

Here is an article on the second domino:

Last Updated: 6th November, 2021 12:35 IST

After Evergrande Another Chinese Real-estate Firm Kaisa Group At Brink Of Defaulting

Amid China's snowballing property debt crisis, Kaisa Group Holding Ltd appears to be at risk of facing default after its affiliate fails to pay onshore investor

Written By
Dipaneeta Das
Evergrande

IMAGE: Unsplash (representative)

Amid China's snowballing property debt crisis, Kaisa Group Holding Ltd appears to be at risk of facing default. The news comes a day after an affiliate missed a payment to onshore investors resulting from "unprecedented pressure" in China's challenging property market, CNN reported. Reports of the crisis followed its rival Evergrande Group, which is currently indebted with $300 billion.

On Thursday, Kaisa Group saw a record drop of 15% drop in its stock value. The company also faced liquidity issues following which it missed payments to its wealth management products, CNN reported quoting the Chinese state-run newspaper Securities Times. Trading of shares of the Shenzhen-based developers was suspended in Hong Kong on Friday citing "pending" payments. Meanwhile, Kaisa has refused to provide further details behind the halt from trading and the recent downgrade of its credit ratings by agencies which has made it more difficult to borrow money from the market, CNN added. However, Kaisa is said to have been "actively raising funds and doing its best to solve current problems," Security Times reported.

Speculations over Evergrande slipping into default continues
Meanwhile, investors have continued to fret over the crisis at one of China's largest and currently most indebted real estate developers, Evergrande. Fears of the company slipping into default on several bond interest payment deadlines have been looming while the company made new obligations, including one reported last week, CNN mentioned. As of October 26, the firm had restarted the construction of several projects as it announced in August. As per AP, they also noted a few buildings had recently finished construction amid claims of making efforts to shore up market confidence.

It is worth the mention that China-based property developers have been reeling under debt since the Xi Jinping-led Communist government tightened limits on corporate debt levels. The second-largest property developer in China, Evergrande hit a stumbling block last year after it struggled to meet interest payments on its debts. Things went bad to worse after the stock prices scuttled owing to a fall in international credit ratings.
 

Doomer Doug

TB Fanatic
Evergrande's $300 billion may be small potatoes in the context of the $65 TRILLION total real estate sector. It was big enough to cause riots at their sales office. It was big enough to have screaming mobs and riot police deployed. It was big enough to have Xi the Merciless :poop: in his pants. And it is big enough to cause the entire cascade domino type effect.

Oh yeah it is big enough.
 

OldArcher

Has No Life - Lives on TB
Old Archer, you are looking at either DIRECT People's Liberation Army control or direct Marxist control, since China doesn't really go for what we would call a private sector. I posted a thread that gives more of the details of the economic chaos.

Mods you can merge these two threads if you want. My thread was saying that Evergrande default, finally and officially is going to happen in a few hours. Evergrande has not made a payment for weeks now.


Looking for a delineation between PLA and CCP is virtually irrelevant. Think interlocking directorates/directories, variations upon a theme. Neither one exists in a vacuum. They cannot exist without the other. It’s an incestuous, corrupt, and vile stew of nepotism, unbridled power, and unquenchable thirst and hunger for control of the world.

OA
 

Techwreck

Veteran Member
Amid China's snowballing property debt crisis,
300 Billion does sound small relative to the global numbers, but how much was that leveraged and onto how many balance sheets as assets?
Snowballing doesn't sound contained, and maybe that's the CCP plan.
If they start a global debt unwind, it will make the Chicom virus seem like a love tap.
 

Griz3752

Retired, practising Curmudgeon
Capital goods (tools, equipment, etc) has seen substantial inflation, and we'll see much more of it in that sector.
Very little of which, maybe none, are "Made In America" anymore

Thanks to a combo of Globalisation Socialists and Corporate Greed
 

Dozdoats

On TB every waking moment
See text in RED below.
===========

Mayhem Beneath the Surface of the Stock Market | Wolf Street

Mayhem Beneath the Surface of the Stock Market
by Wolf Richter • Dec 5, 2021 • 138 Comments
But on the surface, stocks still look hunky-dory.
By Wolf Richter for WOLF STREET.

It’s amazing how individual stocks, at the tippy-top of the biggest stock market bubble in modern times, are getting taken out the back one by one to be crushed, but without denting the overall indices all that much.

The stock market bubble was driven by $4.5 trillion in QE in the US alone, along with many more trillions by other central banks, and it was driven by interest rate repression, even has inflation has been surging to multi-decade highs, not just in the US but globally, and not just in goods, but now also in services, particularly housing, such as rents.

After a decade of QE being relatively benign on the inflation front, giving central bankers a false sense of confidence, it has finally broken the dam, and inflation is now surging everywhere, and it’s spreading across the economy.
Central banks are now no longer denying it, and some have raised rates, and others have ended QE.

Even the Fed, which engineered this money-printing orgy and is very slow in ending it, is now ending it, and it will be raising rates, and everything is moving faster than expected, and suddenly the orgy is over.

Each stock that crashes has its own story for the crash. What they have in common is that they were all ridiculously overvalued, and investors knew it, and they kept hanging on till the last moment to ride them up all the way, but they were sitting all bunched up near the exits, and when the signal came, they all rushed out together, causing those shares to collapse. But even at those much lower valuations, those stocks are still ridiculously overvalued.

DocuSign, a company that still had a market cap of $46 billion on Thursday at the close of regular trading, valuing the company at 20 times its 12-months trailing revenues, despite having lost money every year of its existence, plunged 42% on Friday during regular trading, after it had announced that its revenue and billings growth would slow as “the environment shifted more quickly than we anticipated.” Shares are down 57% since September 3rd. Yet, shares are still ridiculous overvalued, trading at 14 times revenues.

Housing-sales-related stocks got crushed.
Zillow had some good news, well sorta, on Friday by promising a big share buyback as it is unwinding its house-flipping business and selling the thousands of houses it got stuck with largely to institutional buyers. Upon the announcement, Zillow’s shares [ZG] jumped 10% on Friday, which whittled down their collapse since February to 71%.

Opendoor [OPEN], another algo-powered house-flipper, has collapsed by 61% since the peak in February this year, only months after its IPO via merger with a SPAC in December 2020.
Compass, which bills itself as a tech company but is a real estate brokerage, went public in April 2021. Over the eight months since then, its shares [COMP] have collapsed by 53%. Hapless dip buyers got steamrollered. It lost money every year under GAAP. If a brokerage cannot make money in the hottest real estate market ever, when can it make money? It still has a market cap of nearly $4 billion.

Redfin [RDFN], another real estate brokerage that cannot figure out how to make money in the hottest housing market ever, experienced a crazy 730% spike in share prices from March 2020 to February 2021. Much of that spike has now been unwound, with shares down 60% from the peak. Easy come, easy go.

IPO stocks are getting crushed.
The Renaissance IPO ETF [IPO], which tracks the largest and most liquid newly-listed stocks of US companies and whose biggest holdings are Moderna, Snowflake, Uber, Cloudflare, and Zoom Video, has plunged 24% since the peak in February. But some of its biggest holdings have gotten totally crushed.
Moderna [MRNA] has plunged 38% since the peak in August 2021, including a 31% two-day collapse in early November.
Snowflake [SNOW] is trading at an absurd valuation of 125 times revenues, despite huge massive and increasing net losses every year. It’s down only 16% since mid-November, after having bounced back partially from the 14% plunge on December 1. This is a prime candidate for a massive one-day plunge, followed by dip-buying, followed by dip buyers getting taken out the back and crushed.

Uber [Uber] has plunged 48% since April, which reduced its market capitalization to $70 billion. This is a still ridiculously overvalued global taxi enterprise that is now 13 years old and has lost $36 billion since 2016 under GAAP.

Cloudflare [NET] plunged 28% from the peak three weeks ago. With a market cap of $51 billion, the stock trades at a ridiculous 88 times revenues though the company has lost money every year. So now, shareholders get to look forward to that whiff of disappointment that crushed DocuSign on Friday.

When shares of companies that have been around for years and that have never made money are trading at ridiculous valuations of 88 times revenues, well anything can crush them.

Zoom Video [ZM] has plunged 67% from the peak of $568 on October 19, 2020 to $183.92 on Friday. The descent included a 16% plunge on August 31, followed by a little dip-buying, followed by massive drops. Despite this massive haircut, the stock still trades at a ridiculous 15 times revenues.
US-stocks-IPO-2021-12-05-.png

The ARK Innovation ETF [ARKK], that chases the latest and greatest high-flyers from online shopping to crypto exchanges, has plunged 41% since the peak in February.
US-stocks-ARKK-2021-12-05-.png

The entire complex of US-listed Chinese companies has cratered.
The structure of how these Chinese companies issue shares in the US has come under attack by regulators in China because it attempts to dodge Chinese laws against foreign ownership. These companies have created separate off-shore mailbox companies in the Cayman Islands or other tax havens, with a contract with the Chinese company. And those mailbox companies issue American Depositary Receipts (ADR) in the US, and holders of these ADRs own the mailbox company, not the company in China. (colorization mine)

From Alibaba on down, they have all done this to get around Chinese regulations. And investors have been bamboozled into buying ADRs of mailbox companies.

During the Trump administration and now during the Biden administration, these listings have come under attack from US regulators as well, including because companies fail to conform to US disclosure rules.

These companies are now pressured from both sides to delist the ADRs. And prices have collapsed.

Alibaba issued shares in Hong Kong in 2019 via an IPO, and when it gets delisted in the US, it can continue to trade in Hong Kong. It’s Hong Kong shares dropped to a record low of HK$ 119.40 on Friday. In the US, the ADR plunged 8% on Friday to $111.96, the lowest since April 2017, and is down 65% from the peak in October 28, 2020.

All of them got further crushed on Friday: Pinduoduo (-8.2%), Baidu (-7.8%), JD.com (-7.7%), Nio (-11%), and then there’s Didi (-22%).

Didi, the Chinese version of Uber, listed its ADR in the US via an IPO in June this year at the IPO price of $14 a share. After briefly reaching $18 a share, the ADR has since collapsed to $6.07, down 66% from the post IPO peak. Didi is now trying to figure out how to delist the ADR in the US.

Investors who’ve been trying to out-hold these collapses, or who’ve tried to “buy the dip,” have gotten screwed over and over again.

The price of the Invesco Golden Dragon China ETF [PGJ], which tracks these Chinese ADRs listed in the US – it’s largest five holdings are Baidu, Nio, JD.com, Alibaba, and Pinduoduo – plunged 9.3% on Friday and has collapsed by 75% since the peak in February 2021.

PGJ shows what kind of bubble-nonsense these ADRs were and still are, how they’ve been hyped by Wall Street, and how people who believed that stuff got fleeced, despite some of the head-fake bounces and dip-buying on the way down:
US-stocks-PGJ-2021-12-05.png

These were a few examples.
The amount of crushing going on beneath the surface has been phenomenal. After the one-day or two-day plunges, there was dip buying, but these dip buyers had to unload quickly, or else they got crushed, and so, if they could, they unloaded to the slower dip buyers, and they got crushed.

Tesla, which dropped 6.4% on Friday, is down nearly 19% from its 52-week high in early November, as Elon Musk has unloaded over $10 billion of his shares over the past few weeks.
The Russell 2000, which tracks small stocks, has dropped 12% from its peak.

Most of this mayhem playing out among these individual stocks and some of the ETFs is band-aided over by some of the biggest stocks that have held up better. For example, Microsoft is down only 6% since mid-November. Apple barely dipped after hitting a new high on December 1. Google is down only 4.9% from its 52-week high in mid-November. And the Nasdaq has only dropped 6%, including the 1.9% drop on Friday. And so on the surface, it still looks hunky-dory.
 

OldArcher

Has No Life - Lives on TB
And both led by the same group of CCP Elites, all under Xi.

Yup. Same group of Commie arseholes, with more bank accounts and deposits, besides medals and ribbons. Makes ya wanna puke.

Gettin’ damned close to “lock an’ load” time…

OA
 

Double_A

TB Fanatic
Now this is a Chinese company who defaulted on their bonds today (Dec 5). Maybe someone got their wires crossed when reporting the info to Clif.

(fair use applies)

Sunshine 100 China Holdings defaults on SGX-listed bond payment
Sun, Dec 05, 2021
- 11:21 PM
Jude Chanjudechan

CHINESE developer Sunshine 100 China Holdings has defaulted on US$178.9 million of debt and interest payments due Sunday (Dec 5), as the direct fallout of the woes of property companies in China continues to impact investors in Singapore.

Sunshine 100 was due to repay the US$170 million of principal and US$8.9 million of interest on its 10.5 per cent senior notes due 2021, which is listed on the Singapore Exchange (SGX).

But in a bourse filing on Dec 5, the company said it is unable to meet its debt obligations on the bonds "owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry".

The default will also trigger cross default provisions under certain other debt instruments entered into by the company and its subsidiaries which may become immediately due and payable if the creditors choose to accelerate.

Sunshine 100 said that it has not received any notice by any creditors regarding action to accelerate.

The company in August suspended trading of its US$219.6 million 13 per cent senior green notes due 2022, which is also listed on the SGX.

This came after it defaulted on the repayment of US$50.9 million of principal and US$1.5 million of accrued interest under its Hong Kong-listed US$200 million 6.5 per cent convertible bonds due 2021.

The company said then that the default could trigger cross default provisions under certain other debt instruments entered into by the group that are listed on SGX. These include the 10.5 per cent senior notes due 2021 as well as the US$120 million 12 per cent senior notes due 2023.

Higher borrowing costs have struck indebted companies across the property development sector, which have led to a wave of defaults.

This comes amid ongoing fears that Chinese property giant China Evergrande Group could default on its liabilities.

Evergrande chairman Hui Ka Yan was summoned by authorities last Friday after it said there was "no guarantee that the group will have sufficient funds to continue to perform its financial obligations".

The company said it had received a demand under a US$260 million guarantee obligation and added that it may be unable to repay due to the China property sector's liquidity crisis.

so, guess you figured Clif was right after all. They are hiding things until ther’re ready.
 

Toosh

Veteran Member

Hi-D

Membership Revoked
"You don't have to have had any business dealings with them and still be affected.
What it comes down to it's all the companies you do business with, that were involved with them. "

I could agree with that one. Cliff High? Not so much.

TRADER TALK
SEC finalizes rule that allows it to delist foreign stocks for failure to meet audit requirements
PUBLISHED THU, DEC 2 20211:07 PM ESTUPDATED THU, DEC 2 20216:52 PM EST

Bob Pisani@BOBPISANI
SHAREShare Article via FacebookShare Article via TwitterShare Article via LinkedInShare Article via Email
WATCH NOW
VIDEO04:35
SEC to finalize rules that allow delisting of foreign firms

Foreign public companies that are listed in the United States may be delisted if their auditors do not comply with requests for information from U.S. regulators.

On Thursday, the Securities and Exchange Commission adopted amendments to finalize rules to implement the Holding Foreign Companies Accountable Act (HFCAA). The law was passed in 2020 after Chinese regulators repeatedly denied requests from the Public Company Accounting Oversight Board (PCAOB), which was created in 2002 to oversee the audits of public companies, to inspect the audits of Chinese firms that list and trade in the United States.

In 2020, Chinese firm Luckin Coffee fired its CEO and chief operating officer following an internal fraud probe, which increased calls for action.

The law permits the SEC to ban companies from trading and be delisted from exchanges if the PCAOB is not able to audit requested reports for three consecutive years. It also requires companies to declare whether they are owned or controlled by any foreign government.

The rules adopted on Thursday establish a framework for the law’s implementation.
Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), speaks during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, D.C., U.S., on Tuesday, Sept. 14, 2021.

Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), speaks during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, D.C., U.S., on Tuesday, Sept. 14, 2021.
Bill Clark | Bloomberg | Getty Images

“We have a basic bargain in our securities regime, which came out of Congress on a bipartisan basis under the Sarbanes-Oxley Act of 2002. If you want to issue public securities in the U.S., the firms that audit your books have to be subject to inspection by the PCAOB,” SEC Chair Gary Gensler said in a statement.

Gensler noted that while more than 50 foreign jurisdictions have worked with the PCAOB to allow inspections, “two historically have not: China and Hong Kong.”

“This final rule furthers the mandate that Congress laid out and gets to the heart of the SEC’s mission to protect investors,” Gensler noted.

The finalized rules will allow investors to identify foreign companies that are listed in the U.S. that are not allowing the PCAOB to inspect their audits.

“This is a tough situation, because the companies are being held hostage,” Brendan Ahern, chief investment officer of KraneShares, which runs several China-focused ETFs, including the KraneShares China Internet ETF, told me.

“It’s the Chinese regulators who are preventing the U.S. regulators from inspecting the audits,” Ahern said. “The issue unfortunately has been politicized. These companies are all audited by the Big Four accounting firms, but under Chinese law regulators are not allowing those audits to be sent to the PCAOB.”

“What you have is Chinese law clashing with U.S. law,” he said. “This needs to be dealt with above the regulator level, perhaps at the trade representative level.”

“The losers are investors in these stocks, which are U.S. investors,” Ahern added.

He noted that some Chinese companies that list in the U.S. are already relisting in Hong Kong.
 

Heliobas Disciple

TB Fanatic
so, guess you figured Clif was right after all. They are hiding things until ther’re ready.

No, not really. The news that Evergrande defaulted was reported by Evergrande itself, so that's not really a "clif had secret info" thing. And as I said, I see no indication that the CCP has taken over Evergrande. The news is the opposite, however, the news could be lying. So we have to wait and see. As you know, I've been following Clif for years (decades?) but I'm noticing a bunch of fake news/hyperbolic type videos on his twitter/telegraph lately that he's reposting and I'm not sure what's up with that. /drift.

HD
 
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