Sunac Shares Decline %20

Sunac Shares Decline %20

Sunac Shares Decline %20

Everyone is concerned over omicron cases and US inflation data recently.. But another major problem is growing in China. That is the real estate debt problem. Real Estate companies have a total $5 Trillion Debt that is %30 of total GDP. On social media and TV channels we hear more about Evergrande as it has missed 2 Offshore Bond Coupon payments and is negotiating for a delay of an onshore bond payment.  But Evergrande is responsible for only $300 Billion so there are many more companies that have huge debts. Sunac is one of them. 

They have tried to sell some of their stock shares to raise money and pay coupons but it didn't go as well as they had planned. The stock share price has declined %20 only on 12th of January and it is the worst performance of the market. As we have stated earlier the Chinese government is trying to avoid the crash but they may be too late. The Chinese new lunar year will start on 1st of Feb 2022 and the government asked all companies to pay unpaid salaries to workers before the new year. There are only 20 days left and nobody believes that it will happen. 

What happens if this crisis can't be avoided? First of all, it will definitely cause a slowdown in the Chinese Economy and this will create a domino effect in other markets. For example, the biggest trade partner of Germany is China and if Germany can't export enough cars there, we will see contraction in Trade Surplus. Even we can see a deficit as the European Car Market is shrinking already and the only profitable growing market for carmakers is China. The Chinese government realized this problem earlier and they wanted to stop the growing debt bubble. As the companies bet on rising home prices in the last 2 Decades they have borrowed money from Onshore and Offshore investors with high interest rates. But home prices have reached a peak level and these companies can't borrow more money as their financial health is not good. In a couple of months, we will see a debt forgiveness or a crash. But both scenarios will harm investor confidence globally and we should be prepared for another recession. 

You can benefit from a declining market with Gann Markets by opening sell executions. You can earn money with our experienced specialists while some others are losing. 

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