Evergrande. Here's hoping CCP will step in.

Thrugelmir

tranquility1 said:

Investors of the past had very different experiences.  They didn't have governments who could print money and bloat the stock markets.  And this printing of money has almost run its course.

Banks have been printing money since the early 70's. It's called fractional reserve banking. 

tranquility1

Thrugelmir said:

tranquility1 said:

Investors of the past had very different experiences.  They didn't have governments who could print money and bloat the stock markets.  And this printing of money has almost run its course.

Banks have been printing money since the early 70's. It's called fractional reserve banking. 

That's when the gold standard ended. And that's where it all started to go wrong. Except for investing. And since the 80s interest rates have come down from ~18% to 0% also.

But banks can't keep printing money with no control of interest rates.  If you think this situation can continue much longer then I've got some dehydrated water I'd like to sell you.

Thrugelmir

tranquility1 said:

Thrugelmir said:

tranquility1 said:

Investors of the past had very different experiences.  They didn't have governments who could print money and bloat the stock markets.  And this printing of money has almost run its course.

Banks have been printing money since the early 70's. It's called fractional reserve banking. 

That's when the gold standard ended. And that's where it all started to go wrong. Except for investing. And since the 80s interest rates have come down from ~18% to 0% also.

But banks can't keep printing money with no control of interest rates.  If you think this situation can continue much longer then I've got some dehydrated water I'd like to sell you.

Banks started to be reigned in after the GFC. Delveraging bank balance sheets was always going to be a decade plus long exercise.  The macro enviroment was likewise discussed at the G10 summit in May 2010. Unsurprisingly there were no answers just long term objectives with the priority on financial stabilisation. 

Alexland

tranquility1 said:

Investors of the past had very different experiences.

Owning part of a business that generates earnings and pays dividends has generally been a good thing for hundreds possibly thousands of years. Most investors of the past didn't suddenly decide to invest in the stock market at the peak before the 1929 crash and that isn't what people do now.

tranquility1

Alexland said:

tranquility1 said:

Investors of the past had very different experiences.

Owning part of a business that generates earnings and pays dividends has generally been a good thing for hundreds possibly thousands of years. Most investors of the past didn't suddenly decide to invest in the stock market at the peak before the 1929 crash and that isn't what people do now.

That's not what people are doing now, is it...  this isn't the peak of a bubble then before a crash?  That's very reassuring.

maxsteam

tranquility1 said:

And yet the stock market doesn't even flicker...  extraordinary.  Investors either aren't aware or they have balls of steel.

It has effected the property sector of the Chinese stock markets. The assumption that is priced into values at the moment is that the CCP will step in with a government bail out. The question that investors will be asking is how the liquidity and business models of other property companies compares with Evergrande and whether government bail-outs will be available in the future and what the nature of the bail-outs will be. Most properties in China are leasehold apartments so it's not just new-build properties that depend on the solvency of a property company.

CCP has the power to take whatever action it sees fit without worrying too much about legal challenges.

Evergrande is listed in HK. It's shares were trading at over HK$17 in January but they are now less than HK$3.

tranquility1

Thrugelmir said:

tranquility1 said:

Thrugelmir said:

tranquility1 said:

Investors of the past had very different experiences.  They didn't have governments who could print money and bloat the stock markets.  And this printing of money has almost run its course.

Banks have been printing money since the early 70's. It's called fractional reserve banking. 

That's when the gold standard ended. And that's where it all started to go wrong. Except for investing. And since the 80s interest rates have come down from ~18% to 0% also.

But banks can't keep printing money with no control of interest rates.  If you think this situation can continue much longer then I've got some dehydrated water I'd like to sell you.

Banks started to be reigned in after the GFC. Delveraging bank balance sheets was always going to be a decade plus long exercise.  The macro enviroment was likewise discussed at the G10 summit in May 2010. Unsurprisingly there were no answers just long term objectives with the priority on financial stabilisation. 

Is this what you call 'financial stabilisation'?  Looks more like a Crack-Up Boom to me. 

Thrugelmir

maxsteam said:

tranquility1 said:

And yet the stock market doesn't even flicker...  extraordinary.  Investors either aren't aware or they have balls of steel.

It has effected the property sector of the Chinese stock markets. The assumption that is priced into values at the moment is that the CCP will step in with a government bail out. The question that investors will be asking is how the liquidity and business models of other property companies compares with Evergrande and whether government bail-outs will be available in the future. Most properties in China are leasehold apartments so it's not just new-build properties that depend on the solvency of a property company.

Evergrande is listed in HK. It's shares were trading at over HK$17 in January but they are now less than HK$3.

Evergrande is incorporated in the Cayman Islands. Another company with a murky non transparent relationship with the Chinese mainland.  Investors are buying shares in shell companies. The listed company does not actually own any of the underlying assets of the operating companies. Hence , in part, why the SEC in the US wishes to have them delisted from US markets. Non publication of audit reports raises questions over accounting standards. 

Alexland

tranquility1 said:
 this isn't the peak of a bubble then before a crash? 

That's often possible but it's just a risk people need to accept if they want the likely superior returns. Stock markets spend much of their time near all time highs especially if considering total return with dividend reinvestment and linear scale graphs can confuse the brain. Most of us are dollar cost averaging our way into the market and would be drawing a mix of income and capital with some non-equity assets as backup during retirement so won't suffer the loss of someone who uses a lump sum to buy high and sell low.

maxsteam

Thrugelmir said:

Evergrande is incorporated in the Cayman Islands. Another company with a murky non transparent relationship with the Chinese mainland.  Investors are buying shares in shell companies. The listed company does not actually own any of the underlying assets of the operating companies. Hence , in part, why the SEC in the US wishes to have them delisted from US markets. Non publication of audit reports raises questions over accounting standards. 

Yes, they have an OTC listing in US. The rules for OTC listings are less strict than for main market listings. Your comments remind me of the Luckin Coffee saga.

However, access to international markets is such that if Evergrande were delisted in US, a novice investors would still not have too much trouble putting their life savings into the stock via another market.