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This is only the Hong Kong business. Which is why it hasn't had the impact you would expect.

by threeseed 3y ago

ericmay 3y ago
What is the expected impact? And for whom?
- xboxnolifes 3y ago
  Evergrande is a massive property development company. Real estate makes up a massive (20-25%) portion of China's GDP, as well as a very large portion of individuals' net worth. The expected impact is a cascading housing crisis where homes that people have already paid for don't get built, the company bankrupts, and millions of individuals (or their banks) each lose hundreds of thousands of dollars per unbuild home.
loeg 3y ago
The Hong Kong business is the business.
- kayodelycaon 3y ago
  CNN has quotes to the contrary. Most of their Chinese assets are owned by Hengda Real Estate Group, which is legally independent. https://www.cnn.com/2024/01/29/business/evergrande-ordered-to-liquidate-intl-hnk/index.html https://www.cnn.com/2024/01/29/business/evergrande-ordered-t...
  - loeg 3y ago
    Interesting. It's unclear how you liquidate the parent company without liquidating subsidiaries (who is going to buy Hengda RE?) and it seems like legally the HK decision should be binding: > Hong Kong and the mainland city of Shenzhen — where Evergrande is based — have a mutual insolvency recognition agreement, but it’s “effectively inoperative” But China basically ignores HK in this.
    - i_am_jl 3y ago
      I'm very naive about all of this, can I ask what this means? Evergrande has been ordered to liquidate, on paper this means that the Chinese subsidiary Hengda must also liquidate, but China's just... not going to liquidate Hengda? So instead of Evergrande's creditors dividing up Evergrande+Hengda's assets only Evergrande's assets are going to be liquidated? If that's right, how does that work? Does Hengda get bought and the purchase price distributed to creditors? Does China just tell Evergrande's creditors "too bad"?
      - chasd00 3y ago
        > Does China just tell Evergrande's creditors "too bad"? that sounds inline with standard operating procedures.
        miohtama 3y ago
        It also means that foreign direct investments to China will dry up. However they’d likely dry up any case due to US vs. China trade war.
        thriftwy 3y ago
        That's the US, when they see money to be made in next quarter they go for it regardless. Not going to dry up.
        loeg 3y ago
        A little bit, maybe, but probably not entirely. The joke is that debt investors have no memory. For example, Argentina has defaulted many times in recent memory but was still able to market a 100-year bond in 2017 (which it has already defaulted on).
        berserk1010 3y ago
        miohtama is actually correct. Foreign investors have snatched back nearly 90% of the money they put into Chinese stocks this year (2023) https://markets.businessinsider.com/news/stocks/china-economy-chinese-stock-market-foreign-investor-cash-flow-money-2023-12 https://markets.businessinsider.com/news/stocks/china-econom... Foreign investment in China turns negative for first time https://asia.nikkei.com/Economy/Foreign-investment-in-China-turns-negative-for-first-time https://asia.nikkei.com/Economy/Foreign-investment-in-China-...
- xwolfi 3y ago
  No it's the financial holding, they fuck the investors and that s it: they can ignore it as long the 3 city judges in China let them (but everyone will run out of patience eventually: nothing can save this dead horse).
The_Colonel 3y ago
This reddit comment explains this quite well: https://old.reddit.com/r/Economics/comments/1adnx32/evergrande_crisishit_chinese_property_giant/kk2v71h/ https://old.reddit.com/r/Economics/comments/1adnx32/evergran... > HK is sort of what NY is to the US. It is a peripheral region with some minor degree of autonomy but because it just so happens to house the Chinese version of Wall Street this means it’s judiciary is a little bit special when it comes to dealing with insolvency and other corporate issues. This means that it very likely means liquidation in China as well.
- Ericson2314 3y ago
  Comparing HK to NYC is very reductive lol. Though it's kinda funny to imagine the Dutch held onto NYC until the 1990s after which there was some sort of unification process.
  - andruby 3y ago
    > In 1664, the English took over New Amsterdam and renamed it New York after the Duke of York (later James II & VII). That’s a good 300 years before 1990 :) https://en.m.wikipedia.org/wiki/New_Amsterdam https://en.m.wikipedia.org/wiki/New_Amsterdam
    - dmoy 3y ago
      GP is talking about an imaginary hypothetical situation in which NYC would be dutch held until the 1990s, not the real-world timeline
- hiddencost 3y ago
  If DC took NYC by force.
- akeck 3y ago
  Technically, I think replacing NY with Delaware may be a better comparison - specifically with respect to the Delaware Court of Chancery in which most large US companies litigate business issues.

This is only the Hong Kong business. Which is why it hasn't had the impact you would expect.

ericmay 3y ago

What is the expected impact? And for whom?

xboxnolifes 3y ago
Evergrande is a massive property development company. Real estate makes up a massive (20-25%) portion of China's GDP, as well as a very large portion of individuals' net worth. The expected impact is a cascading housing crisis where homes that people have already paid for don't get built, the company bankrupts, and millions of individuals (or their banks) each lose hundreds of thousands of dollars per unbuild home.

loeg 3y ago

The Hong Kong business is the business.

kayodelycaon 3y ago
CNN has quotes to the contrary. Most of their Chinese assets are owned by Hengda Real Estate Group, which is legally independent. https://www.cnn.com/2024/01/29/business/evergrande-ordered-to-liquidate-intl-hnk/index.html https://www.cnn.com/2024/01/29/business/evergrande-ordered-t...
- loeg 3y ago
  Interesting. It's unclear how you liquidate the parent company without liquidating subsidiaries (who is going to buy Hengda RE?) and it seems like legally the HK decision should be binding: > Hong Kong and the mainland city of Shenzhen — where Evergrande is based — have a mutual insolvency recognition agreement, but it’s “effectively inoperative” But China basically ignores HK in this.
  - i_am_jl 3y ago
    I'm very naive about all of this, can I ask what this means? Evergrande has been ordered to liquidate, on paper this means that the Chinese subsidiary Hengda must also liquidate, but China's just... not going to liquidate Hengda? So instead of Evergrande's creditors dividing up Evergrande+Hengda's assets only Evergrande's assets are going to be liquidated? If that's right, how does that work? Does Hengda get bought and the purchase price distributed to creditors? Does China just tell Evergrande's creditors "too bad"?
    - chasd00 3y ago
      > Does China just tell Evergrande's creditors "too bad"? that sounds inline with standard operating procedures.
      - miohtama 3y ago
        It also means that foreign direct investments to China will dry up. However they’d likely dry up any case due to US vs. China trade war.
        thriftwy 3y ago
        That's the US, when they see money to be made in next quarter they go for it regardless. Not going to dry up.
        loeg 3y ago
        A little bit, maybe, but probably not entirely. The joke is that debt investors have no memory. For example, Argentina has defaulted many times in recent memory but was still able to market a 100-year bond in 2017 (which it has already defaulted on).
        berserk1010 3y ago
        miohtama is actually correct. Foreign investors have snatched back nearly 90% of the money they put into Chinese stocks this year (2023) https://markets.businessinsider.com/news/stocks/china-economy-chinese-stock-market-foreign-investor-cash-flow-money-2023-12 https://markets.businessinsider.com/news/stocks/china-econom... Foreign investment in China turns negative for first time https://asia.nikkei.com/Economy/Foreign-investment-in-China-turns-negative-for-first-time https://asia.nikkei.com/Economy/Foreign-investment-in-China-...
xwolfi 3y ago
No it's the financial holding, they fuck the investors and that s it: they can ignore it as long the 3 city judges in China let them (but everyone will run out of patience eventually: nothing can save this dead horse).

The_Colonel 3y ago

This reddit comment explains this quite well: https://old.reddit.com/r/Economics/comments/1adnx32/evergrande_crisishit_chinese_property_giant/kk2v71h/ https://old.reddit.com/r/Economics/comments/1adnx32/evergran... > HK is sort of what NY is to the US. It is a peripheral region with some minor degree of autonomy but because it just so happens to house the Chinese version of Wall Street this means it’s judiciary is a little bit special when it comes to dealing with insolvency and other corporate issues. This means that it very likely means liquidation in China as well.

Ericson2314 3y ago
Comparing HK to NYC is very reductive lol. Though it's kinda funny to imagine the Dutch held onto NYC until the 1990s after which there was some sort of unification process.
- andruby 3y ago
  > In 1664, the English took over New Amsterdam and renamed it New York after the Duke of York (later James II & VII). That’s a good 300 years before 1990 :) https://en.m.wikipedia.org/wiki/New_Amsterdam https://en.m.wikipedia.org/wiki/New_Amsterdam
  - dmoy 3y ago
    GP is talking about an imaginary hypothetical situation in which NYC would be dutch held until the 1990s, not the real-world timeline
hiddencost 3y ago
If DC took NYC by force.
akeck 3y ago
Technically, I think replacing NY with Delaware may be a better comparison - specifically with respect to the Delaware Court of Chancery in which most large US companies litigate business issues.