The company has taken prepayments from thousands of ordinary families for properties not yet built.
Protesters have been gathering outside the offices of Chinese property giant Evergrande in recent days to demand their money back, as the company struggles to repay debts of more than U.S.$300 billion amid a liquidity crisis.
Chanting “Pay us back! Pay us back!”, dozens of protesters gathered outside the company’s headquarters in the southern city of Shenzhen on Wednesday, after the company warned it may not be able to service its debts, and offered property and parking spaces in a bid to stave off creditors’ demands.
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WNU Editor: Wall Street is already warning that the bankruptcy of Evergrande will have global implications …. Goldman Sachs, JPMorgan warn of Evergrande’s debt woes spillover risks (Reuters).
But I think it is too late.
The developer is officially $300 billion in debt, and I am willing to bet that this is a low number. 1.5 million Chinese families have put deposits for a new home, but there is no money and the projects are nowhere near completion.
Also …. no financial institution will want to deal with them.
I am expecting a bailout from Beijing, but it will be limited.
Bottom line. This is going to impact everyone, starting with those who invested in Evergrande, followed by the contractors, followed by overseas Chinese investments being sold-off to cover obligations back home, followed by countries that export raw minerals that fed China’s construction boom.
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