by Chris Black
Stimulus (archive.is/Gx9ok).
China’s Central Bank surprised investors with the steepest cut rate cut since COVID, as July delivered another month of disappointing economic numbers. The grim market reaction suggests Beijing must take bolder steps to ease worries.
Cutting Targets (archive.is/l0Pzu).
At least five investment banks cut their projections for China’s economic growth this year. Most of these predict Beijing will miss its 5% GDP target.
Shadow Banking Crisis (archive.is/62jzk).
Financial giant Zhongzhi suspended payments on nearly all its investment products and plans to restructure its debt. That’s shaking faith in trust firms, which lent billions of dollars to cash-strapped property developers like Country Garden in an already struggling Chinese real estate sector.
Selloff (archive.is/Y7wcd).
Chinese assets are approaching a grim set of milestones. The MSCI China index erased all gains since July’s dovish Politburo meeting. Authorities set the strongest ever fixing to support the yuan and told state banks to step up intervention.
Turning Point (archive.is/YN8rX).
Officials around the world are ringing alarm bells about the global impact of China’s slowdown. President Biden called it a “ticking time bomb,” while US Treasury secretary Yellen identified it as a “risk factor” for America’s economy.
Sovereign Score (archive.is/RecBQ).
Fitch said it may reconsider China’s A+ credit score if Beijing extends its balance sheet to support the economy. “Its debt-to-GDP ratio is a little bit on the high side for a single A credit,” the head of sovereigns told BloombergTV.
Property (archive.is/t8j59).
State-owned developers warned of widespread losses. Eighteen of 38 listed state builders reported preliminary losses in the first half. It suggests the housing crisis is expanding from the private sector to firms with government backing.
Bankruptcy (archive.is/lRDkb).
China’s Evergrande Group filed for Chapter 15 bankruptcy protection in New York. The move protects it from creditors in the US while it works on a restructuring deal elsewhere including in Hong Kong and the Cayman Islands.
Tech Miss (archive.is/WKCHk).
Tencent Holdings earnings disappointed with a less-than-expected 11% rise in revenue. Sales from major divisions including gaming and cloud services fell well short of projections, offsetting strong online advertising.
All links are to related Bloomberg articles, and are archived to bypass the paywall.
All of this happened in China this week. A thread 🧵1/10 t.co/6HjdwIARlq
— Rebecca Choong Wilkins 钟碧琪 (@RChoongWilkins) August 18, 2023