{"id":49877,"date":"2023-08-17T23:55:40","date_gmt":"2023-08-18T03:55:40","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/china-evergrande-collapse-shows-need-for-1-trillion-beijing-rescue-plan-says-clocktower-strategist\/"},"modified":"2023-08-17T23:55:42","modified_gmt":"2023-08-18T03:55:42","slug":"china-evergrande-collapse-shows-need-for-1-trillion-beijing-rescue-plan-says-clocktower-strategist","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=49877","title":{"rendered":"China Evergrande collapse shows need for $1 trillion Beijing rescue plan, says Clocktower strategist"},"content":{"rendered":"
\n

China Evergrande Group\u2019s
\n EGRNF,
\n <\/bg-quote>
\n bankruptcy filing in New York on Thursday shows a need for Beijing to go big, and soon, to sop up the nation\u2019s soured real estate market, says Clocktower Group\u2019s Marko Papic.<\/p>\n

China\u2019s second-largest property developer asked a Manhattan court on Thursday for protection from creditors under Chapter 15 of the U.S. bankruptcy code, a way for foreign companies undergoing a restructuring to be shielded from creditors in the U.S.<\/p>\n

\n

It\u2019s the latest development in a long and drawn-out saga over the debt-laden developer, which recently had about $340 billion in liabilities. Another Chinese developer, Country Garden Group, has been in the spotlight in recent days after it missed $22.5 million of dollar-denominated debt payments.<\/p>\n

China Evergrande\u2019s Tianji Holdings affiliate also sought Chapter 15 in New York on Thursday, according to court documents.<\/p>\n

\u201cThe bigger issue is that China\u2019s policy makers are holding out hope that confidence can return organically\u201d to its teetering property market, Papic told MarketWatch on Thursday evening.<\/p>\n

Since mid-2021, companies accounting for 40% of Chinese home sales have defaulted, including Evergrande in late 2021, stoking fears about the resilience of the world\u2019s second-largest economy.<\/p>\n

Papic said global financial markets already were aware of the developer\u2019s debt woes, so Thursday\u2019s filing shouldn\u2019t come as a shock. Still, he thinks Chinese policy makers should act quickly to shore up confidence, while noting that it took Western governments nearly a decade to come up with an effective playbook to revive their wobbling economies in the wake of similar debt crises. Those plans have included rate cuts, quantitative easing or government bond-buying, but also lately a bazooka-load of fiscal stimulus.<\/p>\n

\u201cIn China, you don\u2019t have that luxury,\u201d he said, adding that recent rate cuts from China\u2019s central bank won\u2019t likely go far enough to restore confidence or shore up woes of private developers. <\/p>\n

Instead, he sees the need for China to borrow from Mario Draghi\u2019s \u201cwhatever it takes\u201d playbook in his years at the head of the European Central Bank through a tumultuous eight years starting in 2011. <\/p>\n

Papic said China may need to absorb some $1 trillion in soured real-estate assets from the private sector, in a move similar to the Federal Reserve\u2019s takeover of toxic mortgage and related derivatives off banks\u2019 balance sheets in the wake of the 2007-2008 global financial crisis.<\/p>\n

Several Wall Street banks have lowered their 2023 growth forecasts for China gross domestic product, including UBS last week cutting its expectations to 5.2% from 5.7%.<\/p>\n

Read<\/strong>: China ETFs tumble after PBOC\u2019s rate cut disappoints markets<\/p>\n

U.S. stock futures
\n YM00,
\n +0.11%<\/bg-quote><\/p>\n

ES00,
\n +0.03%<\/bg-quote>
\n were modestly higher overnight, after the S&P 500 index
\n SPX,<\/span>
\n Dow Jones Industrial Average
\n DJIA
\n and Nasdaq Composite Index
\n COMP
\n fell for a third day in a row Thursday.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

China Evergrande Group\u2019s EGRNF, bankruptcy filing in New York on Thursday shows a need for Beijing to go big, and soon, to sop up the nation\u2019s soured real estate market, says Clocktower Group\u2019s Marko Papic. China\u2019s second-largest property developer asked a Manhattan court on Thursday for protection from creditors under Chapter 15 of the U.S. […]<\/p>\n","protected":false},"author":1,"featured_media":49878,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-49877","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nChina Evergrande collapse shows need for $1 trillion Beijing rescue plan, says Clocktower strategist | iFintechWorld<\/title>\n<meta name=\"description\" content=\"China Evergrande Group\u2019s EGRNF, bankruptcy filing in New York on Thursday shows a need for Beijing to go big, and soon, to sop up the nation\u2019s soured real\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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