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Chinese banks suffer heavy losses as delinquencies hit $17.88b in January


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2019 May 8, 5:03pm   939 views  4 comments

by Al_Sharpton_for_President   ➕follow (5)   💰tip   ignore  

The energy sector saw the most defaults of $6.94b.

China’s banking sector is shouldering the heavy burden of higher delinquencies which rose from 2017 to a record $17.88b (RMB119.6b) in January, according to DBS.

The energy sector saw the most defaults of $6.94b (RMB46.4b) followed by consumer companies. By location, Shanghai booked the most number of defaults at almost $4.49b (RMB30b) followed by Shangxi $2.47b (RMB16.5b) and Zhejiang $1.54b (RMB10.3b). The private sector also accounted for 90% of those with tight credit conditions.

“The resulting deterioration of corporate cash flow was evident by collapsing M1 growth,” Nathan Chow, strategist/economist at DBS said in a report. “Given the reduced risk appetite and huge maturing volume, the outlook is poor, with $523.23b (RMB3.5t) in corporate bonds due in the next twelve months.”

Also read: Retail delinquencies add to Chinese banks' bad loan woes

Further aggravating the liquidity strain are climbing real interest rates which have risen to 4.3% in January from as low as -3.1% in Q1 2017. “The consequential tighter monetary conditions would add to the financial stress on Chinese firms with high leverage and maturity mismatches. That doesn’t bode well for their debt repayment ability,” said Chow.

China's real estate sector has been facing one of the most severe funding pressure especially against the ongoing property downturn. Home sales by floor area has slowed to a mere 2.2% growth in 2018 from 22.4% in the previous year. Moreover, the liquid assets of property firms are only able to cover 58% of their liabilities which is the lowest amongst all industries.

The government has repeatedly eased fiscal policy in an attempt to mitigate the impact of the economic slowdown through a series of tools and stimulus designed to encourage banks to unleash more funds. “Whilst further corporate defaults appear inevitable, credit spreads have stabilised, and the stock market has staged a nascent rebound (the CSI 300 is up by 13% ytd),” said Chow.

https://sbr.com.sg/financial-services/asia/chinese-banks-suffer-heavy-losses-delinquencies-hit-1788b-in-january

China has much much more then 6 Billion in defaults this year… What they do since every bank is government owed, is allocate bad loans and defaults to specific banks to try and contain shock from becoming systemic by limiting exposures, also gives illusion to outsiders that things aren’t as bad as they really are, little paid advertisement to a Bloomberg editor and voila! Only 6 Billions defaults… Reality is they had close to 120 Billion Yuan or 17.88 Billion US of Defaults just in January 2019 alone!

https://sbr.com.sg/financial-services/asia/chinese-banks-suffer-heavy-losses-delinquencies-hit-1788b-in-january

Losses appear on bank sheets, goes into some hidden section as loss and other state owned bank who originated the loans gets made flush… Transferring Fiat from one state owned to another.

The realllll problem is US Issued bonds, and all those dollar swaps with 1 year expiry they have been doing, it’s a time bomb for real! Imagine the chaos when China starts defaulting on US denominated, meaning they would have to start floating RMB… Sorry for rambling, but I am obsessed with China’s Ponzi Economy, never seen and never will see anything like depression that is awaiting that country… 25 % + of GDP is derived from Construction alone, which doesn’t increase debt servicing at all. Debt keeps sky rocketing while servicing capabilities are doing down

From 08 to 2018, 70 % of the world’s debt was created by China’s Corporate Sector alone!!! With Local governments and Central Government, China created 85-90 % of the world’s debt in the past 10 years. Look into earnings last Thursday and this week, it’s insane how many companies claimed profits for 2018 then revised it this past week to substantial losses for 2018, insanity and greed has over taken that Country, there is no morality left in China, sadly…

https://wolfstreet.com/2019/05/08/perhaps-its-time-to-start-worrying-about-global-corporate-debt-suggests-bank-of-england/

Comments 1 - 4 of 4        Search these comments

1   Eman   2019 May 8, 11:42pm  

How does this kind of stuff leak out? Their communist government censors everything.
2   🎂 Tenpoundbass   2019 May 10, 1:01pm  

All they have to do is keep building up Africa.
China should move people out to their Ghost Cities. They've got huge economic engines just sitting there doing nothing but rotting.
I wonder what are the Chinese going to do, when they finish developing Africa and Africans don't want to live a City productive life?
3   rocketjoe79   2019 May 12, 10:20am  

The last picture is always so fake. Pretty, lipsticked Chinese hotties, in new, clean uniforms, arms raised in praise of the motherland!!

Look at all the seated ones in back: downtrodden masses wondering when they can get back to their backbreaking farm labor, of which, the state will take 80% and "reapportion" to the "needy." Meaning, the pockets of the powerful.

Welcome to socialism!!
4   Y   2019 May 12, 10:44am  

Your 16 oz box of rice a roni will be made of heavier boxes to shortchange the contents.

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