1929 & Dot Com Charts
- Thread starter West Dundee Hawkeye
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@bunsen82 are you still riding this Tiger?Chinese real estate sector penny stocks?
Seems like Chinese real estate might be getting dicey:
Bloomberg reports overnight, a rapidly increasing number of "disgruntled Chinese homebuyers" are refusing to pay mortgages for unfinished construction projects, exacerbating the country’s real estate woes and stoking fears that the crisis will spread to the wider financial system as countless mortgages default.
According to researcher China Real Estate Information, homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen.
“The names on the list doubled every day in the past three days,” Chen wrote in a note published Thursday. “The incident would dampen buyer sentiment, especially for presold products offered by private developers given the higher risk on delivery, and weigh on the gradual sales recovery.”
What's behind this grassroot movement to halt mortgage payments altogether? Negative equity:
According to Citi analysts, average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years. Meanwhile, it's only getting worse as China’s home prices fell for a ninth month in May, with June figures set for release Friday.
The crisis engulfing Chinese developers is reaching a new phase, with a debt selloff expanding to firms once deemed safe from the cash crunch, including investment-grade names such as Country Garden Holdings, the largest builder by sales.
The payment refusals, which come at a time when China's economy is set to post what may be a negative GDP print due to the latest economic shutdown over Xi's catastrophic zero covid policies, underscore how the storm engulfing China’s property sector is now affecting hundreds of thousands of average citizens, posing a threat to social stability ahead of a Communist Party Congress later this year. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults.
As a result of the unprecedented push for a debt jubilee, shares of China’s banks extended their recent decline Thursday, with the CSI 300 Banks Index falling as much as 3.3% before closing down 2.2%. A Bloomberg Intelligence index of Chinese developer stocks slid as much as 2.7%, even though Chinese lenders were quick to try and dispel fears that the movement could crash the economy: according to Bank of Communications, its outstanding balance of overdue mortgage loans linked to housing projects with risks of delayed delivery is 99.8 million yuan, accounting for 0.0067% of its domestic housing mortgage balance. The bank added that its housing mortgage loan quality is stable and risks are controllable, the Shanghai-based lender says in an exchange filing. At the same time, Postal Savings Bank of China says its overdue mortgage loans linked to halted housing projects is 127m yuan, and risks are controllable. Of course, it's not like Chinese banks would ever lie, now is it?
Which is why others remained skeptical: Nomura analysts said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Confidence that projects will be completed has weakened as developers’ cash woes intensified, according to the Japanese bank. Even before the crisis, developers only delivered around 60% of homes they presold between 2013 and 2020, while outstanding mortgage loans rose by 26.3 trillion yuan, Nomura analysts including Ting Lu wrote in a note Wednesday.
“Presales carry mounting risks for developers, homebuyers, the financial system and the macro economy,” Ting wrote. Failure to build homes on time reduces households’ willingness to buy new properties, and rising raw material prices may mean funds from presales are insufficient to construct them.
We are especially concerned about the financial impact of the homebuyers’ ‘stopping mortgage repayments’ movement,” Ting wrote. “China’s property downturn may finally adversely affect onshore financial institutions after hitting the offshore high-yield dollar bond market.”
* * *
While rising non-performing loans for Chinese banks are “manageable” for now, “more risk events are likely to come, at the backdrop of China’s growth slowdown, residents’ expectation of worse future income, and shrinking property sales,” affecting China’s social stability, Jefferies’s Chen said.
At that point Beijing will be faced with a stark choice: inject a massive amount of liquidity into the market, or brace for the biggest fear for every Chinese politician: a middle-class insurrection. We doubt they will pick the latter.
Thats the one nice thing with XIN - they sold nearly a billion worth of real estate in London late last year, and another 300 million in New York late 2021 and have Target as Lease. They have more cash flow than most Chinese real estate companies, that doesn't mean they still aren't distressed. Its a capital intensive business and they have too much interest expense in my opinion. June sales in all of China were up 60% from May but still down from the prior year. the tier 3 cities are the ones getting hurt - those are the ones down 20-30%, which XIN doesn't operate. Tier 2 cities are essentially flat and Tier 1 cities are slightly up. Its the Tier 3 cities where the carnage is. Also if a pre buyer is going to walk out and give their down payment to the builder that becomes free capital - assuming they can find someone else to sell it too.@bunsen82 are you still riding this Tiger?
Seems like Chinese real estate might be getting dicey:
Bloomberg reports overnight, a rapidly increasing number of "disgruntled Chinese homebuyers" are refusing to pay mortgages for unfinished construction projects, exacerbating the country’s real estate woes and stoking fears that the crisis will spread to the wider financial system as countless mortgages default.
According to researcher China Real Estate Information, homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen.
“The names on the list doubled every day in the past three days,” Chen wrote in a note published Thursday. “The incident would dampen buyer sentiment, especially for presold products offered by private developers given the higher risk on delivery, and weigh on the gradual sales recovery.”
What's behind this grassroot movement to halt mortgage payments altogether? Negative equity:
According to Citi analysts, average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years. Meanwhile, it's only getting worse as China’s home prices fell for a ninth month in May, with June figures set for release Friday.
The crisis engulfing Chinese developers is reaching a new phase, with a debt selloff expanding to firms once deemed safe from the cash crunch, including investment-grade names such as Country Garden Holdings, the largest builder by sales.
The payment refusals, which come at a time when China's economy is set to post what may be a negative GDP print due to the latest economic shutdown over Xi's catastrophic zero covid policies, underscore how the storm engulfing China’s property sector is now affecting hundreds of thousands of average citizens, posing a threat to social stability ahead of a Communist Party Congress later this year. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults.
As a result of the unprecedented push for a debt jubilee, shares of China’s banks extended their recent decline Thursday, with the CSI 300 Banks Index falling as much as 3.3% before closing down 2.2%. A Bloomberg Intelligence index of Chinese developer stocks slid as much as 2.7%, even though Chinese lenders were quick to try and dispel fears that the movement could crash the economy: according to Bank of Communications, its outstanding balance of overdue mortgage loans linked to housing projects with risks of delayed delivery is 99.8 million yuan, accounting for 0.0067% of its domestic housing mortgage balance. The bank added that its housing mortgage loan quality is stable and risks are controllable, the Shanghai-based lender says in an exchange filing. At the same time, Postal Savings Bank of China says its overdue mortgage loans linked to halted housing projects is 127m yuan, and risks are controllable. Of course, it's not like Chinese banks would ever lie, now is it?
Which is why others remained skeptical: Nomura analysts said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Confidence that projects will be completed has weakened as developers’ cash woes intensified, according to the Japanese bank. Even before the crisis, developers only delivered around 60% of homes they presold between 2013 and 2020, while outstanding mortgage loans rose by 26.3 trillion yuan, Nomura analysts including Ting Lu wrote in a note Wednesday.
“Presales carry mounting risks for developers, homebuyers, the financial system and the macro economy,” Ting wrote. Failure to build homes on time reduces households’ willingness to buy new properties, and rising raw material prices may mean funds from presales are insufficient to construct them.
We are especially concerned about the financial impact of the homebuyers’ ‘stopping mortgage repayments’ movement,” Ting wrote. “China’s property downturn may finally adversely affect onshore financial institutions after hitting the offshore high-yield dollar bond market.”
* * *
While rising non-performing loans for Chinese banks are “manageable” for now, “more risk events are likely to come, at the backdrop of China’s growth slowdown, residents’ expectation of worse future income, and shrinking property sales,” affecting China’s social stability, Jefferies’s Chen said.
At that point Beijing will be faced with a stark choice: inject a massive amount of liquidity into the market, or brace for the biggest fear for every Chinese politician: a middle-class insurrection. We doubt they will pick the latter.
So whats my base case on a stock currently trading for .77 on the dollar that I have a basis of a little over a $1 on. This is a stock that has been heavily manipulated by a singular short seller. That short seller is down to 60,000 shares short after 6/30. I honestly think after the short seller is done this will build higher fairly quickly. The other thing that needs to be done is they need to report their 2021 Financials. Stated they couldn't audit Shanghai location due to Covid lockdowns. I think their reasoning is slightly bogus but will take it at face value. If they report I believe this stock doubles just in the short term. I would actual prefer the short seller closes his position first. I also think XIN has been jerking around delaying reporting so they can purchase more bonds back at .10 to .13 cents on the dollar.
If the real estate market in China begins to stabilize more this fall in China I again think this stock goes much higher. Right now this stock to me will not go much lower even if it does oh well, for the last month it has bounced from high 70's to high 80 cent range. All I need is for them not to go bankrupt and continuing to kick the can down the road. My goal is to sell options and sell this for an exit price of around $4-$5.
I have no problem waiting on highly depressed stocks, similar to what I did with AR. This thing is trading at .06 to .07 cents for book value. This is trading at a lower book value than companies on the hong kong exchange that is in major distress and had to sell units in the Tier 3 cities at a major loss.
Its an extremely speculative and aggressive play that needs patience. However, what your article is showing is the government is going to have to continue to be more accommodative to the real estate sector. I think they will. Have they fundamentally changed the chinese peoples view that housing is no longer an investment? I don't think so. they still can't invest in the stock market so this is the primary way for them to invest. Unemployment of the younger ages is likely a bigger problem, but I think that will start to improve as well.
Maybe I have brass balls I don't know
, I still feel ok with this. Look at it this way, this could end up being an epic fail and I am still up 200% on what I originally invested back in 2019, or higher by selling out if they announce they are looking into bankruptcy, at 50-60% less than I am now. Or this goes higher and I could essentially retire.Here would be my grand plan if I could ever pull it off. There is 500 million or more of real estate still in New York. If you could round up enough capital 70-80 million, you could purchase debt at .10 cents on the dollar, buy shares at a $1 or slightly higher and also purchasing cheap options. Trying to accumulate 10 -15 million shares and another 5 million in options and own over 100 to 150 million in bonds. Spending 25 to 40 million. Then use the other 30-40 mil for 10 % capital on the real estate. Then begin to pick up the New York real estate property in 25-30 million chunks (possibly slightly below market value) and begin to get them leased. Once you have a tranche leased, purchased another 25 million. That would be a major cash influx. Likely more than enough to meet the three red lines and or give XIN enough cash to pay off the bonds outright in 16 months. You could possibly end up with 400 million - 500 million of income property in New York with no to little debt.
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Low and behold XIN jumped 5 cents on minimal share volume. If there is any momentum to purchase at all this stock goes much higher.
Nevermind, jumped 7 cents LOL. Due to the lack of volume the volatility on this is crazy. However due to the lack of volume, it would be extremely difficult to get out of if you needed to.
Nevermind, jumped 7 cents LOL. Due to the lack of volume the volatility on this is crazy. However due to the lack of volume, it would be extremely difficult to get out of if you needed to.
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So Seminole lets lay the cards bare. I have 440,000 shares. Like I said will either end up being an epic fail or a massive massive win. I am a CPA, I feel comfortable with the financials, if they are accurate. I give this a better than 90% chance of paying off.@bunsen82 are you still riding this Tiger?
Seems like Chinese real estate might be getting dicey:
Bloomberg reports overnight, a rapidly increasing number of "disgruntled Chinese homebuyers" are refusing to pay mortgages for unfinished construction projects, exacerbating the country’s real estate woes and stoking fears that the crisis will spread to the wider financial system as countless mortgages default.
According to researcher China Real Estate Information, homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen.
“The names on the list doubled every day in the past three days,” Chen wrote in a note published Thursday. “The incident would dampen buyer sentiment, especially for presold products offered by private developers given the higher risk on delivery, and weigh on the gradual sales recovery.”
What's behind this grassroot movement to halt mortgage payments altogether? Negative equity:
According to Citi analysts, average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years. Meanwhile, it's only getting worse as China’s home prices fell for a ninth month in May, with June figures set for release Friday.
The crisis engulfing Chinese developers is reaching a new phase, with a debt selloff expanding to firms once deemed safe from the cash crunch, including investment-grade names such as Country Garden Holdings, the largest builder by sales.
The payment refusals, which come at a time when China's economy is set to post what may be a negative GDP print due to the latest economic shutdown over Xi's catastrophic zero covid policies, underscore how the storm engulfing China’s property sector is now affecting hundreds of thousands of average citizens, posing a threat to social stability ahead of a Communist Party Congress later this year. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults.
As a result of the unprecedented push for a debt jubilee, shares of China’s banks extended their recent decline Thursday, with the CSI 300 Banks Index falling as much as 3.3% before closing down 2.2%. A Bloomberg Intelligence index of Chinese developer stocks slid as much as 2.7%, even though Chinese lenders were quick to try and dispel fears that the movement could crash the economy: according to Bank of Communications, its outstanding balance of overdue mortgage loans linked to housing projects with risks of delayed delivery is 99.8 million yuan, accounting for 0.0067% of its domestic housing mortgage balance. The bank added that its housing mortgage loan quality is stable and risks are controllable, the Shanghai-based lender says in an exchange filing. At the same time, Postal Savings Bank of China says its overdue mortgage loans linked to halted housing projects is 127m yuan, and risks are controllable. Of course, it's not like Chinese banks would ever lie, now is it?
Which is why others remained skeptical: Nomura analysts said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Confidence that projects will be completed has weakened as developers’ cash woes intensified, according to the Japanese bank. Even before the crisis, developers only delivered around 60% of homes they presold between 2013 and 2020, while outstanding mortgage loans rose by 26.3 trillion yuan, Nomura analysts including Ting Lu wrote in a note Wednesday.
“Presales carry mounting risks for developers, homebuyers, the financial system and the macro economy,” Ting wrote. Failure to build homes on time reduces households’ willingness to buy new properties, and rising raw material prices may mean funds from presales are insufficient to construct them.
We are especially concerned about the financial impact of the homebuyers’ ‘stopping mortgage repayments’ movement,” Ting wrote. “China’s property downturn may finally adversely affect onshore financial institutions after hitting the offshore high-yield dollar bond market.”
* * *
While rising non-performing loans for Chinese banks are “manageable” for now, “more risk events are likely to come, at the backdrop of China’s growth slowdown, residents’ expectation of worse future income, and shrinking property sales,” affecting China’s social stability, Jefferies’s Chen said.
At that point Beijing will be faced with a stark choice: inject a massive amount of liquidity into the market, or brace for the biggest fear for every Chinese politician: a middle-class insurrection. We doubt they will pick the latter.
Just a shade under, I am willing to take strong positions. I generally can hedge my positions fairly quickly with calls. In this case delaying the 2021F has delayed this process a little longer than I would have like but I am ok with that. I have 200k invested elsewhere, much much safer. I am not diversified, I know that. However, value wise its one of the best values out there. US is coming down but still no where near the value in foreign markets. The book value is .07. That is just stupid low, I am invested slightly over .08. Their foreign investments have done very well. I think currently they are one of the best capitalized chinese real estate companies due to the foreign sales. They have property in China that they may be slow on selling but they won't have to sell at discounts and have time to sell that. They have done no emergency sales for cash. Not even of land/building/project in New York that they could sell at a nearly 50% profit and increase the cash position. The joint venture in London only has a few units left, if cash is needed again could sell to the joint venture. These companies only go bankrupt if forced to, they don't want to give all their equity to the chinese government. Show me any other investment that has near the value proposition. I haven't found one.
This isn't on a whim. I have probably put more than 100 hours of research in this and have crunched the numbers multiple times. I expect the book value to go up to $14 to $15 if not higher, depends on how much debt they can buy on the cheap. The question on this is how high can the price get once this rebounds? I am expecting a book value of 50-60% China will be in a slower growth environment so I think they will have to become more of a foreign builder with a few projects in the Tier 1 and Tier 2 cities in China.
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The smart money is accumulating. If we have a recession, they may look stupid, but at these prices there is value to be had.
440,000 x $15 = $6,600,000
Somehow in my mind I was thinking there would be another zero on that. Still, can we be friends?
Actually, I should take about $10k and toss it on this at $.88/share.
10,000/$.88 = 11,363 shares x $15 = $170,454. Not bad. I could maybe retire on schedule...(checks 401k account for last quarter)...maybe not.
I think he's saying book value, not share price. He says the book value is currently 7 cents and it should go to 15 bucks. I have no clue what kind of share price we're talking here.
If it survives and book value does get up to $14 to $15, i think Chinese real estate sticks will be trading 50-60% of book value, so $7-8.
Hey Seminole, so I originally posted something different. Showing the stock had gone up today. However a notice came out that some bonds are in default. It changes the picture. I will have to decide which direction I will go in.@bunsen82 are you still riding this Tiger?
Seems like Chinese real estate might be getting dicey:
Bloomberg reports overnight, a rapidly increasing number of "disgruntled Chinese homebuyers" are refusing to pay mortgages for unfinished construction projects, exacerbating the country’s real estate woes and stoking fears that the crisis will spread to the wider financial system as countless mortgages default.
According to researcher China Real Estate Information, homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen.
“The names on the list doubled every day in the past three days,” Chen wrote in a note published Thursday. “The incident would dampen buyer sentiment, especially for presold products offered by private developers given the higher risk on delivery, and weigh on the gradual sales recovery.”
What's behind this grassroot movement to halt mortgage payments altogether? Negative equity:
According to Citi analysts, average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years. Meanwhile, it's only getting worse as China’s home prices fell for a ninth month in May, with June figures set for release Friday.
The crisis engulfing Chinese developers is reaching a new phase, with a debt selloff expanding to firms once deemed safe from the cash crunch, including investment-grade names such as Country Garden Holdings, the largest builder by sales.
The payment refusals, which come at a time when China's economy is set to post what may be a negative GDP print due to the latest economic shutdown over Xi's catastrophic zero covid policies, underscore how the storm engulfing China’s property sector is now affecting hundreds of thousands of average citizens, posing a threat to social stability ahead of a Communist Party Congress later this year. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults.
As a result of the unprecedented push for a debt jubilee, shares of China’s banks extended their recent decline Thursday, with the CSI 300 Banks Index falling as much as 3.3% before closing down 2.2%. A Bloomberg Intelligence index of Chinese developer stocks slid as much as 2.7%, even though Chinese lenders were quick to try and dispel fears that the movement could crash the economy: according to Bank of Communications, its outstanding balance of overdue mortgage loans linked to housing projects with risks of delayed delivery is 99.8 million yuan, accounting for 0.0067% of its domestic housing mortgage balance. The bank added that its housing mortgage loan quality is stable and risks are controllable, the Shanghai-based lender says in an exchange filing. At the same time, Postal Savings Bank of China says its overdue mortgage loans linked to halted housing projects is 127m yuan, and risks are controllable. Of course, it's not like Chinese banks would ever lie, now is it?
Which is why others remained skeptical: Nomura analysts said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Confidence that projects will be completed has weakened as developers’ cash woes intensified, according to the Japanese bank. Even before the crisis, developers only delivered around 60% of homes they presold between 2013 and 2020, while outstanding mortgage loans rose by 26.3 trillion yuan, Nomura analysts including Ting Lu wrote in a note Wednesday.
“Presales carry mounting risks for developers, homebuyers, the financial system and the macro economy,” Ting wrote. Failure to build homes on time reduces households’ willingness to buy new properties, and rising raw material prices may mean funds from presales are insufficient to construct them.
We are especially concerned about the financial impact of the homebuyers’ ‘stopping mortgage repayments’ movement,” Ting wrote. “China’s property downturn may finally adversely affect onshore financial institutions after hitting the offshore high-yield dollar bond market.”
* * *
While rising non-performing loans for Chinese banks are “manageable” for now, “more risk events are likely to come, at the backdrop of China’s growth slowdown, residents’ expectation of worse future income, and shrinking property sales,” affecting China’s social stability, Jefferies’s Chen said.
At that point Beijing will be faced with a stark choice: inject a massive amount of liquidity into the market, or brace for the biggest fear for every Chinese politician: a middle-class insurrection. We doubt they will pick the latter.
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I got completely out. Less than 20% loss from when the announcement was made and 30% loss overall. Honestly, I had pegged 50% as the most likely outcome when I took the position. They announced in the notice they are working with bankruptcy lawyers, all they say is regarding their debt issues, but we all know what that means. They have an interest payment due on more debt today. I wasn't going to wait around. Here is what is weird, over 3 day last week I dumped 200,000 shares, goes down to .65. I sell 220,000 today and I sell for an average slightly above .65. Someone was scooping up the shares. Maybe its a massive head fake. I am unwilling to take the chance to find out. I will find some other long shots and undervalued stocks.
I know you mentioned this country isn’t China specific, I just found this remarkable:
Yep and 220k last week spread out over 3 days. If someone is going to be willing to scoop up the shares today I will gladly dump with a potential notice coming out later today or tomorrow that they didn't pay interest on another bond. I was willing to wait another day or two to sell out. Look I am not afraid to purchase thinly traded stocks. In some cases like this one, it appears i benefitted as I don't think many of the investors fully read the notice from XIN. I fully expected the stock to drop 50% the following day possibly 75%. It didn't it dropped 10% the first day and I was able to sell 80,000 shares just gradually selling.
Yep things are falling apart quickly. Another reason not to stick around.I know you mentioned this country isn’t China specific, I just found this remarkable:
Some stocks are starting to break out and a few very strong stocks have made significant moves this week. They don't all break out at once. Here is a 1998 NASDAQ chart with dates marked where leading stocks had significant breakouts from consolidations/bases. If we continue to see stocks break out and the early leaders continue to rise, then we can have confidence that this isn't just a temporary relief rally before another leg down.
I’ve been hammering AMD and Nvidia. No great analysis other than they seemed cheap after the selloff and they’re leaders in that industry which is definitely not going away
Seems we're at a bit of a crossroads right now. Things certainly feel better compared to mid-June, but still feels on a knife's edge and a whiff of bad news will result in a bloody week. Hoping for the best though.
Not too late to go into cash. Monday is Rosh Hashana. Markets tend to go down during this religious holiday per Art Cashin with CNBC.
I think Bear Market will last at least 6 more months. Real (inflation adjusted) Fed Funds Rate is about -5%. That is around the lows during the Jimmy Carter years.
If you go buy the Warren Buffet indicator, the S&P 500 should fall another 27%.
Warren Buffett Indicator Oct 22
I was guessing one more leg down. We'll see. I watched a presentation recently that covered the depth and duration of bear markets taking into consideration recession and no recession. I will find the page and take a screenshot.
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This guy does great research. Uses data from the Cleveland Fed.
Tweet from Bob Elliott @BobEUnlimited
The Fed will respond to the data. What the Fed will see the next few months: A few more core cpi prints around 6.5% m/m ann, core PCE printing above 5% m/m ann. Headline CPI around 9% m/m ann. Jobs >200k/mo. Hard to see any dovish shift with these numbers.
Of course they are. They can't refrain themselves from being in the limelight and showing the power they yield right now.
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