Is China Evergrande Really Fine?

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by  Milkdud2000

Not Financial Advise – Just a deeper look at Hong Kong and China Evergrande…

Hang Seng – HSI

I was looking at Hong Kong just now and noticed it really started to tank in February of 2021. The Hang Seng “HSI” tracks the Hong Kong Market.

www.hsi.com.hk/eng

There is Main Land and Hong Kong. We are looking at “HSI” on the Hong Kong market. Im not an expert here, so open to corrections…

China started to decline in February of 2021…

Firstly, I was not aware China has fallen since February. The Hang Seng 52 week high is 31,183.36 and today trades at 24,192.16.

So todays price is 24,192.16/31,183.36 = 7758 = so lets say China is down 22.5% this year.

Holy Moly, China is in a “bear market”. Lets check Investopedia real quick…

A bear market is when a market experiences prolonged price declines. It typically describes a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment. … Bear markets also may accompany general economic downturns such as a recession.

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www.investopedia.com/terms/b/bearmarket.asp#:~:text=A%20bear%20market%20is%20when,pessimism%20and%20negative%20investor%20sentiment.&text=Bear%20markets%20also%20may%20accompany%20general%20economic%20downturns%20such%20as%20a%20recession.

finance.yahoo.com/quote/%5EHSI?p=^HSI&.tsrc=fin-srch

China Evergrande Stock

China Evergrande Stock started Collapsing in July of 2020.

China Evergrande Stock lost about $500bn in market cap since July of 2020.

This tells us that China Evergrande was struggling well before the Hong Kong market and and it really wasn’t until Evergrande hit $10 a share that the selling really started for the HSI.

China Evergrande Bonds – www.bondsupermart.com/bsm/bond-factsheet/XS1580431143

First of all these bonds were “Junk” or “high yield” to begin with. Think about interest rates globally, these guys have $300bn in debt and pay high coupons such at the…

March 2022 8.250%. Okay, good luck paying 8.250% in the current yield environment. It’s not sustainable and thats why the stock and bonds are collapsing.

The interesting thing about this is the bonds and how they priced. They held in there for most of it and fell of a cliff end of May beginning of June.

Evergrande Bonds Below.

Bonds actually went up in value as the world searched for yield.

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The Evergrande Bonds took a hit in July… What happened to the HSI in July?

HSI started to really fall in July and is stuck in a down trend.

I think that if you look at the HSI, China Evergrande Bonds, and China Evergrande Stock, its enough evidence to suggest this company has more struggles ahead, and it can actually effect the Hong Kong market. If Hong Kong market crashes it can roll over in to US and Europe.

The China High Yield Market is also at risk, which means this shit storm could come from Debt or Equity. This is more confirmation bias that securities remain mispriced and a crash may be coming.

(No Fundamentals were looked at, this is a light overview of the charts – but the charts are dog shit)

tl:dr Hong Kong is in a bear market – down 20 percent over a period of 6 months… China Evergrande looks like some toxic shiat…

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