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The story that somehow the Chinese government tried to censor somebody in Hong Kong (pre-2019) for saying a non-state-owned-enterprise was doomed didn't seem qu

by hnfong 3y ago

The story that somehow the Chinese government tried to censor somebody in Hong Kong (pre-2019) for saying a non-state-owned-enterprise was doomed didn't seem quite right. So I looked it up. https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=16PR84 https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-ann... It looks like this Andrew Left claimed Evergrande was insolvent in *2012*. This seems more specific than "the company was doomed". I suspect the claims in 2012 was at least a bit of a hyperbole, since you'd have to hide it pretty well to keep being insolvent for 10 years. From what I read the trigger of the Evergrande blowup was over leveraged loans and a slowing property market, the situation would have been a bit different in 2012. This seems like a case of "predicted the last 9 of the 5 recessions". I'm not sure a company blowing up 10 years after he said it was doomed is much vindication except to the extent that maybe it was really a crappy company after all.

seanmcdirmid 3y ago
Evergrande has been insolvent for a long time. The government kept patching it up, but anyone could tell just by looking at the data. So you know, if the numbers say your debt is waaaaaay over your asset (they’ve been leveraged since 2008 or so, most Chinese real estate companies, just that Evergrande was exceptionally so), but the government keeps you alive for 10 years anyways, is the trader wrong or you know, the government.
- seanmcdirmid 3y ago
  Also, the reason the HK court gave for its judgement is not that Andrew Left lied or was touting fake numbers or anything like that, but the literal judgement is that “He had the right data but didn’t understand how the Chinese market was different from the West.”
  - hnfong 3y ago
    I'm reading the raw report - https://www.mmt.gov.hk/files/Evergrande_Report.pdf https://www.mmt.gov.hk/files/Evergrande_Report.pdf It looks like Left's concerns were largely legitimate, but he wasn't familiar enough with the standard accounting and industry practices that the authorities were able to nitpick details he got wrong, and he probably used a bit of hyperbolic tone to describe the real concerns about the Chinese property market. The problems with the Chinese property market isn't "accounting fraud" as alleged because everybody is doing it in the open, I guess. I think Left's main "fault" was that he shorted the stock, triggered a small panic, and profited from the deal. I mean, that's market manipulation unless the allegations are true, and it really is unfortunate that when it comes to truth, it's more like "what I said might be technically wrong, but I'm telling the truth!"
    - futhey 3y ago
      He profited from the panic, not the eventual failure of Evergrande. So the court ruled in accordance with the intent of the law. If they were legally insolvent back then and his information forced them to immediately declare bankruptcy, this short would have been above board.

by hnfong 3y ago

seanmcdirmid 3y ago

Evergrande has been insolvent for a long time. The government kept patching it up, but anyone could tell just by looking at the data. So you know, if the numbers say your debt is waaaaaay over your asset (they’ve been leveraged since 2008 or so, most Chinese real estate companies, just that Evergrande was exceptionally so), but the government keeps you alive for 10 years anyways, is the trader wrong or you know, the government.

seanmcdirmid 3y ago
Also, the reason the HK court gave for its judgement is not that Andrew Left lied or was touting fake numbers or anything like that, but the literal judgement is that “He had the right data but didn’t understand how the Chinese market was different from the West.”
- hnfong 3y ago
  I'm reading the raw report - https://www.mmt.gov.hk/files/Evergrande_Report.pdf https://www.mmt.gov.hk/files/Evergrande_Report.pdf It looks like Left's concerns were largely legitimate, but he wasn't familiar enough with the standard accounting and industry practices that the authorities were able to nitpick details he got wrong, and he probably used a bit of hyperbolic tone to describe the real concerns about the Chinese property market. The problems with the Chinese property market isn't "accounting fraud" as alleged because everybody is doing it in the open, I guess. I think Left's main "fault" was that he shorted the stock, triggered a small panic, and profited from the deal. I mean, that's market manipulation unless the allegations are true, and it really is unfortunate that when it comes to truth, it's more like "what I said might be technically wrong, but I'm telling the truth!"
  - futhey 3y ago
    He profited from the panic, not the eventual failure of Evergrande. So the court ruled in accordance with the intent of the law. If they were legally insolvent back then and his information forced them to immediately declare bankruptcy, this short would have been above board.