Something for your Espresso: In China, there is a Lehman every year
Morning from Europe
China is back in the lime-light with halted trading in Country Garden onshore bonds and another 16-17% in the Country Garden equity value. Broad spill-overs are material with the Hang Seng Properties Index down almost 3%, not back trading almost at the lows that preceded the pseudo-reopening in October 2022.
Those within the CCP who expected the reopening to solve the issues in the trust sectors, most notably in residential real estate, probably have to revisit their stance now as the October-2022 lows are getting uncomfortably close with second to none fundamental support.
Chart 1: Chinese RE is back around or below October 2022 lows.. Bye bye reopening effect
Focus is back on China with issues in the trust industries. Country Garden looks increasingly like an Evergrande 2.0 case but global markets are not overly worried. Should they be? After all, there is a Lehman in China almost yearly.
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