[베이징=뉴스핌] Correspondent Choi Heon-kyu = Chinese portal Tengxin (Tencent) finance minister 22 Citing Il Forbes, the Hengda scandal reported that the situation was different from that of Lehman Brothers.
While the debt crisis in Hengda real estate was escalating, the Chinese stock market was closed for two days in a row on the 20th and 21st for the Mid-Autumn Festival, but during this period, the global capital market was affected by the Hengda crisis and suffered some share price corrections.
Citing Ryan Detrick, chief strategist of LPL Financia, an American investment advisory group, Tencent Finance said that Hengda’s suspension of bond trading before the Chuseok holiday “is one step closer to debt restructuring and default.” .
The Trick strategist, however, pointed out that some experts disagreed with the claim that the Hengda default would lead to domino bankruptcy and a systemic financial crisis, and that the Hengda crisis was similar to the collapse of Lehman Brothers during the 2008 financial crisis.
According to Chinese media reports, Hengda told the bank before the Chuseok holiday that it had no way of repaying its debts due in September. As a result, stock prices of the entire real estate sector in China, including Hengda stock, plummeted all at once, affecting the stock prices of other industries as well. However, the Shanghai index of the Chinese stock market, which reopened on the 22nd after a four-day Chuseok holiday including the weekend, rose 0.4% to 3628.49 points, drawing attention.
|[베이징=뉴스핌] Correspondent Choi Heon-gyu = [사진=바이두]. 2021.09.22 [email protected]|
Hengda currently has 1,300 real estate development projects across China. It employs about 200,000 people and has created 2 million jobs annually through this development project.
Hengda Real Estate announced in 2020 its operating income (sales) totaled 700 billion yuan. However, as a result of excessive leverage, the debt has reached about 2 trillion yuan. It is a known fact that the US and other global capital markets will be under great pressure as Hungary is unable to repay the 84 million dollar interest due on September 30th.
The Trick strategist agrees that Hengda’s liquidity crisis is serious, but insists that it will not lead to a collapse in the same way as the collapse of Lehman Brothers in the US. He pointed out that unlike investment banks, a significant portion of Hengda’s debt is in the form of sovereign funds and stocks, which has little to do with institutions such as banks.
Above all, the Trick strategist said the Chinese government could intervene to prevent large defaults and the company could sell other assets to pay off its debts if there were any more.
Tencent’s finance ministry also quoted experts from wealth management firm The Bahnsen Group as saying that the Hengda crisis will be handled differently from Lehman Brothers’ bankruptcy in that China has strong control over the financial system and real estate market.
This expert argues that the US did not artificially bail out Lehman Brothers in 2008, but if China determines that there is a risk of a systemic financial crisis, it can use its hands to reduce the impact of the Hengda crisis on the Chinese financial market and economy in any form. filed a
Some argue that restructuring can be accomplished by going into bankruptcy, changing owners, selling assets, etc. to reduce the amount of debt as much as possible, and then extending the remaining debt. It is expected that the response to the Hengda incident will be carried out in a different way than the US neglected to bankrupt Lehman Brothers in any form.
In addition, it is different from the 2008 global financial crisis triggered by the collapse of Lehman Brothers in the United States in that the bank loans of Chinese real estate developers are not complicatedly linked with sellable derivatives, and debt adjustments require strict consultation and supervision. Global financial experts are drawing the line.
Beijing = Correspondent Choi Heon-gyu [email protected]