All of this begins with one thing – Real Estate. Chinese are obsessed with Real Estate and 70% of China’s wealth is tied to real estate (twice as high as the US).
Reports are now emerging about real estate Ponzi schemes, Mortgage boycotts, and an unfolding banking crisis pic.twitter.com/Dvajdo47Qa
— Graham Stephan (@GrahamStephan) August 17, 2022
For some context on how crazy the real estate market in China is, the median home price in New York is around 10 times the median annual income, but in Beijing, this can be as high as 25 times the median annual income! pic.twitter.com/DcpKK2uand
— Graham Stephan (@GrahamStephan) August 17, 2022
The crisis spread to banks, as they had loaned out depositors’ money to developers who were now defaulting on payments.
As frozen deposits mounted and protests erupted all over China, investigations revealed critical systemic issues
— Graham Stephan (@GrahamStephan) August 17, 2022
With reports suggesting that over 400,000 customers have fallen victim to such activities, public trust in the banking system plummeted and the government stepped in to avoid bank runs and liquidity crunches. But their strategies seem, at best, questionable. pic.twitter.com/XpxpclhihU
— Graham Stephan (@GrahamStephan) August 17, 2022
Whether these strategies can revive investor confidence or is simply delaying the inevitable remains to be seen, but China is unlikely to meet its targeted 5.5% GDP growth rate, and right now, youth unemployment is at nearly 20%!
— Graham Stephan (@GrahamStephan) August 17, 2022
Short-term investors should keep an eye out for news from China. The events and its impacts are covered in more detail in my newsletter, so don’t forget to subscribe there! https://t.co/cAPvxUtjgl
— Graham Stephan (@GrahamStephan) August 17, 2022
Follow me @GrahamStephan for more interesting insights into the world of personal finance, investing and stock market.
— Graham Stephan (@GrahamStephan) August 17, 2022
This is REALLY bad news for China in 20-25yrs from now
Japanification upcoming pic.twitter.com/83PfeJdCnG
— Andreas Steno Larsen (@AndreasSteno) August 16, 2022
Bank runs spread to Australia as fallout from China’s Henan province crisis
- Massive queues have been seen this week outside the Bank of China in Sydney
- Hundreds of people have waited to make transactions at Haymarket branch
- Many believe it is a response to five Chinese banks being frozen after fraud
- Conglomerate from Henan region manipulated banks into stealing money
- Customers likely worried about losing their funds amid run on banks in China
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