How 2008 Will Happen AGAIN | EVERGRANDE
Published at : September 27, 2021
How the Chinese Lehman Brothers (Evergrande) will make 2008 happen "again".
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Las Vegas, NV 89103
Here’s the truth about investing and the market, the market doesn’t care about the truth. The real market is based on “market sentiments” aka - how people are feeling about what’s going on. Lately investors are starting to feel worried about the stock market and they're taking a conservative approach to investing.
WHAT IS EVERGRANDE?
Evergrande is a property developer in China that some people are calling the Chinese Lehman brothers and that’s not helping market sentiment. If you remember in 2008 the Lehman brothers collapsed and it triggered the global financial crisis and that’s where this story begins.
REAL ESTATE BUBBLE
For context, the US, home ownership rate is 65.4%. Meanwhile in China the home ownership rate is over 90% because it is socially treated as an important investment. Looking at the top 10 cities in China, the price to income ratio starts at 18 on the low end, and goes as high as 49 in Beijing. People are borrowing 49 times their annual income to buy a home. Here in the states the average is 4 and in China it's 27. People are borrowing as much as 49x their annual income.
THE BIGGEST FEAR: DEBT
Evergrande has grown to be the second biggest property developer in China that has over 1,300 development projects across 280 cities. They financed their operation through debt.
HOW MUCH DO THEY OWE?
$300 billion dollars which accounts for 2% of China’s GDP which doesn’t sound like a lot, until you realize that real estate makes up 29% of China’s GDP.
WHO DO THEY OWE AND HOW DID THEY GET THERE?
Step 1. Build and presell homes and apartments at high profit through overly inflated appraisal values.
Step 2. Use leverage from the profit they made from taking advantage of over inflated prices to build more projects.
Step 3. Before they finish their current projects start the next pre-sale to people at overly inflated values for even more profit.
Step 4 Profit.
If at any point they needed more money, they issued bonds and paid their buyers interest for holding them. This is how they ended up owing people, banks, hedge funds, and virtually everyone in the world, money.
DOES THIS AFFECT THE WORLD?
There's 2 ways we can measure the "contagion" effect from Evergrande's debt. The first method is to look at their top bond holders.
SIDENOTE: AUM = Assets Under Management
1. Ashmore Group has an AUM of 86 billion dollars. Ashmore owns $433 million which represents half a percent of their holdings.
2. BlackRock manages 9.5 trillion and their 385 million of bonds represents .004%.
3. UBS Group has an AUM of 2.6 trillion, that 275 million represents .01% of their holdings.
4. HSBC’s AUM is 621 billion of which their Evergrande exposure is .04%.
WHAT DOES THIS MEAN?
It means the top holders of "debt" from Evergrande hold less than .5% of their holdings, which means if Evergrande was to fail, those companies should be fine.
METHOD 2:
The second way to look at Evergrande's impact is to look at the Credit Default Swap Index: https://www.barrons.com/articles/evergrandes-credit-contagion-risk-51632231686)
WHAT IS A CREDIT DEFAULT SWAP INDEX?
This is the equivalent of taking out an insurance policy on your investment. The index tells us that as of right now, companies have stopped buying credit default swaps which means things are not as bad as they appear. If it was worse, many companies would take out insurance (driving the prices higher which is why there is a spike on September 20th).
WHY IS CRYPTO FALLING THEN?
There is a rumor that Tether (the stablecoin) held a significant amount of Evergrande assets; however, they deny having Evergrande on their balance sheet.
WHAT I'M INVESTING IN, BUYING & MY THOUGHTS:
Enjoy the video!
*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
► Get up to a $250 in Digital Currency: https://blockfi.com/andrei
► Where I Buy Bitcoin: https://gemini.sjv.io/1E3dz
► My Stock Portfolio + Stock Tracker: https://www.patreon.com/andreijikh
► Get 2 FREE stocks valued up to $1850 (when you deposit $100): https://act.webull.com/kol-us/share.html?hl=en&inviteCode=QhhB1aDNwEDP
► MY DISCORD: https://discord.gg/9TVPxj73Bb
► ROBINHOOD (Get 1 Stock When You Sign Up): https://robinhood.c3me6x.net/c/1980551/671816/10402
► Open A Roth IRA: https://m1finance.8bxp97.net/c/1980551/696710/10646
► Follow Me On Instagram: https://www.instagram.com/andreijikh/
► How I Protect My Bitcoin: https://shop.ledger.com/pages/ledger-nano-x?r=535643c13ab0
My PO Box:
Andrei Jikh
4132 S. Rainbow Blvd # 270
Las Vegas, NV 89103
Here’s the truth about investing and the market, the market doesn’t care about the truth. The real market is based on “market sentiments” aka - how people are feeling about what’s going on. Lately investors are starting to feel worried about the stock market and they're taking a conservative approach to investing.
WHAT IS EVERGRANDE?
Evergrande is a property developer in China that some people are calling the Chinese Lehman brothers and that’s not helping market sentiment. If you remember in 2008 the Lehman brothers collapsed and it triggered the global financial crisis and that’s where this story begins.
REAL ESTATE BUBBLE
For context, the US, home ownership rate is 65.4%. Meanwhile in China the home ownership rate is over 90% because it is socially treated as an important investment. Looking at the top 10 cities in China, the price to income ratio starts at 18 on the low end, and goes as high as 49 in Beijing. People are borrowing 49 times their annual income to buy a home. Here in the states the average is 4 and in China it's 27. People are borrowing as much as 49x their annual income.
THE BIGGEST FEAR: DEBT
Evergrande has grown to be the second biggest property developer in China that has over 1,300 development projects across 280 cities. They financed their operation through debt.
HOW MUCH DO THEY OWE?
$300 billion dollars which accounts for 2% of China’s GDP which doesn’t sound like a lot, until you realize that real estate makes up 29% of China’s GDP.
WHO DO THEY OWE AND HOW DID THEY GET THERE?
Step 1. Build and presell homes and apartments at high profit through overly inflated appraisal values.
Step 2. Use leverage from the profit they made from taking advantage of over inflated prices to build more projects.
Step 3. Before they finish their current projects start the next pre-sale to people at overly inflated values for even more profit.
Step 4 Profit.
If at any point they needed more money, they issued bonds and paid their buyers interest for holding them. This is how they ended up owing people, banks, hedge funds, and virtually everyone in the world, money.
DOES THIS AFFECT THE WORLD?
There's 2 ways we can measure the "contagion" effect from Evergrande's debt. The first method is to look at their top bond holders.
SIDENOTE: AUM = Assets Under Management
1. Ashmore Group has an AUM of 86 billion dollars. Ashmore owns $433 million which represents half a percent of their holdings.
2. BlackRock manages 9.5 trillion and their 385 million of bonds represents .004%.
3. UBS Group has an AUM of 2.6 trillion, that 275 million represents .01% of their holdings.
4. HSBC’s AUM is 621 billion of which their Evergrande exposure is .04%.
WHAT DOES THIS MEAN?
It means the top holders of "debt" from Evergrande hold less than .5% of their holdings, which means if Evergrande was to fail, those companies should be fine.
METHOD 2:
The second way to look at Evergrande's impact is to look at the Credit Default Swap Index: https://www.barrons.com/articles/evergrandes-credit-contagion-risk-51632231686)
WHAT IS A CREDIT DEFAULT SWAP INDEX?
This is the equivalent of taking out an insurance policy on your investment. The index tells us that as of right now, companies have stopped buying credit default swaps which means things are not as bad as they appear. If it was worse, many companies would take out insurance (driving the prices higher which is why there is a spike on September 20th).
WHY IS CRYPTO FALLING THEN?
There is a rumor that Tether (the stablecoin) held a significant amount of Evergrande assets; however, they deny having Evergrande on their balance sheet.
WHAT I'M INVESTING IN, BUYING & MY THOUGHTS:
Enjoy the video!
*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
stock market crashbitcoin crashreal estate crash