Beyond Evergrande, China’s Property Market Faces a $5 Trillion Reckoning

As many economists say China enters what is now the final phase of one of the biggest real-estate booms in history, it is facing a staggering bill: According to economists at Nomura, $ 5 trillion plus loans that developers had taken at a good time. Holdings Inc.

The debt is almost double that at the end of 2016 and last year exceeded the overall economic output of Japan, the world’s third-largest economy.

With warning signs on the debt of nearly two-fifths of growth companies borrowed from international bond investors, global markets are poised for a potential wave of defaults.

Chinese leaders are getting serious about addressing debt by taking a series of steps to curb excessive borrowing. But doing so without hurting the property market, crippling more developers and derailing the country’s economy is turning into one of the biggest economic challenges for Chinese leaders, and one that resonates globally when mismanaged. could.

Luxury Developer Fantasia Holdings Group Co. It failed to pay $206 million in dollar bonds that matured on October 4. In late September, Evergrande, which has more than $300 billion in liabilities, missed two interest-paying deadlines for the bond.

A wave of sell-offs hit Asian junk-bond markets last week. On Friday, bonds of 24 of 59 Chinese growth companies on the ICE BofA Index of Asian Corporate Dollar Bonds were trading at over 20% yields, indicating a high risk of default.

Some potential home buyers are leaning, forcing companies to cut prices to raise cash, and could potentially accelerate their slide if the trend continues.

According to data from CRIC, a research arm of property services firm e-House (China) Enterprise Holdings, overall sales among China’s 100 largest developers were down 36 per cent in September from a year earlier. Ltd.

It revealed that the 10 largest developers, including China Evergrande, Country Garden Holdings Co. and china wenke Co., saw a decline of 44% in sales compared to a year ago.

Economists say most Chinese developers remain relatively healthy. Beijing has the firepower and tighter control of the financial system needed to prevent the so-called Lehman moment, in which a corporate financial crisis snowballs, he says.

In late September, Businesshala reported that China had asked local governments to be prepared for potentially intensifying problems in Evergrande.

But many economists, investors and analysts agree that even for healthy enterprises, the underlying business model—in which developers use credit to fund steady churn of new construction despite the demographic less favorable for new housing—is likely to change. Chances are. Some developers can’t survive the transition, he says.

Of particular concern is some developers’ practice of relying heavily on “presales”, in which buyers pay upfront for still-unfinished apartments.

The practice, more common in China than in the US, means developers are borrowing interest-free from millions of homes, making it easier to continue expanding but potentially leaving buyers without ready-made apartments for developers to fail. needed.

According to China’s National Bureau of Statistics, pre-sales and similar deals were the region’s biggest funding sources since August this year.

“There is no return to the previous growth model for China’s real-estate market,” said Hous Song, a research fellow at the Paulson Institute, a Chicago think tank focused on US-China relations. China is likely to put a set of limits on corporate lending, known as the “three red lines” imposed last year, which helped trigger the recent crisis on some developers, he added. That China can ease some other restrictions.

While Beijing has avoided explicit public statements on its plans to deal with the most indebted developers, many economists believe leaders have no choice but to keep the pressure on them.

Policymakers are determined to reform a model fueled by debt and speculation as part of President Xi Jinping’s broader efforts to mitigate the hidden risks that could destabilize society, especially at key Communist Party meetings next year. before. Mr. Xi is widely expected to break the precedent and extend his rule to a third term.

Economists say Beijing is concerned that after years of rapid home price gains, some may be unable to climb the housing ladder, potentially fueling social discontent, as economists say. The cost of young couples is starting to drop in large cities, making it difficult for them to start a family. According to JPMorgan Asset Management, the median apartment in Beijing or Shenzhen now accounts for more than 40 times the average family’s annual disposable income.

Officials have said they are concerned about the risk posed by the asset market to the financial system. Reinforcing developers’ business models and limiting debt, however, is almost certain to slow investment and cause at least some slowdown in the property market, one of the biggest drivers of China’s growth.

The real estate and construction industries account for a large portion of China’s economy. Researchers Kenneth S. A 2020 paper by Rogoff and Yuanchen Yang estimated that industries, roughly, account for 29% of China’s economic activity, far more than in many other countries. Slow housing growth could spread to other parts of the economy, affecting consumer spending and employment.

Government figures show that about 1.6 million acres of residential floor space were under construction at the end of last year. This was roughly equivalent to 21,000 towers with the floor area of ​​the Burj Khalifa in Dubai, the tallest building in the world.

Housing construction fell by 13.6% in August below its pre-pandemic level, as restrictions on borrowing were imposed last year, calculations by Oxford Economics show.

Local governments’ income from selling land to developers declined by 17.5% in August from a year earlier. Local governments, which are heavily indebted, rely on the sale of land for most of their revenue.

Another slowdown will also risk exposing banks to more bad loans. According to Moody’s Analytics, outstanding property loans—mainly mortgages, but also loans to developers—accounted for 27% of China’s total of $28.8 trillion in bank loans at the end of June.

As pressure on housing mounts, many research houses and banks have cut China’s growth outlook. Oxford Economics on Wednesday lowered its forecast for China’s third-quarter year-on-year GDP growth from 5% to 3.6%. It lowered its 2022 growth forecast for China from 5.8% to 5.4%.

As recently as the 1990s, most city residents in China lived in monotonous residences provided by state-owned employers. When market reforms began to transform the country and more people moved to cities, China needed a massive supply of high-quality apartments. Private developers stepped in.

Over the years, he added millions of new units to modern, streamlined high-rise buildings. In 2019, new homes made up more than three-quarters of home sales in China, less than 12% in the US, according to data cited by Chinese property broker Kei Holdings Inc. in a listing prospectus last year.

In the process, developers grew to be much bigger than anything seen in the US, the largest US home builder by revenue, DR Horton. Inc.,

Reported assets of $21.8 billion at the end of June. Evergrande had about $369 billion. Its assets included vast land reserves and 345,000 unsold parking spaces.

For most of the boom, developers were filling a need. In recent years, policymakers and economists began to worry that much of the market was driven by speculation.

Chinese households are prohibited from investing abroad, and domestic bank deposits provide low returns. Many people are wary of the country’s booming stock markets. So some have poured money into housing, in some cases buying three or four units without the intention of buying or renting them out.

As developers bought more places to build, land sales boosted the national growth figures. Dozens of entrepreneurs who founded growth companies are featured on the list of Chinese billionaires. Ten of the 16 soccer clubs of the Chinese Super League are wholly or partially owned by the developers.

Real-estate giants borrow not only from banks but also from shadow-banking organizations known as trust companies and individuals who invest their savings in investments called wealth-management products. Overseas, they became a mainstay of international junk-bond markets, offering juicy produce to snag deals.

A builder, Kaisa Group Holdings Ltd. , defaulted on its debt in 2015, was still able to borrow and later expand. Two years later it spent the equivalent of $2.1 billion to buy 25 land parcels, and $7.3 billion for land in 2020. This summer, Cassa sold $200 million of short-term bonds with a yield of 8.65%.

By: Quentin Webb & Stella Yifan Xie 

Source: Beyond Evergrande, China’s Property Market Faces a $5 Trillion Reckoning – WSJ

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Here’s What Could Happen When $300 Unemployment Expires, According To Goldman Sachs


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Amid reports of labor shortages and fears of economic overheating thanks to what some view as excessive government stimulus spending, a total of 26 states are now planning to end the $300 federal unemployment supplement in order to spur hiring—here’s what analysts from Goldman Sachs expect to happen once payments stop.

Key Facts

Goldman’s analysts point out that since 25 of the states ending the benefit early only account for 29% of pandemic job losses, it’s likely that the pressures on the labor market—worker shortages and a depressed labor force participation rate—will continue until the benefits expire in every state at the beginning of September.

The analysts note that it’s too soon to say how the early end of benefits will affect official employment statistics—that insight will likely be contained in the July jobs report the Labor Department will publish in August.

That said, claims for regular state unemployment insurance benefits have fallen faster in states that have announced they will end the supplement early—the analysts say this is a “hint” that hiring will pick up once the benefits are phased out, but note that other data like the volume of job postings don’t yet support that conclusion.

The analysts say their “best guess” is that the expiring benefits will “provide a significant tailwind to hiring in the coming months,” spurring growth of more than 150,000 jobs in July and more than 400,000 jobs in September, though they note that the prediction is still uncertain.

Based on previous academic studies, the analysts estimate that a typical worker receiving regular state benefits will see those benefits drop by 50% once the $300 supplement expires in their state, and the duration of their unemployment would fall roughly 25%.

Crucial Quote

“The temporary boost in unemployment benefits . . . helped people who lost their jobs through no fault of their own and are still maybe in the process of getting vaccinated, but it’s going to expire in 90 days,” President Biden said during prepared remarks after the release of the May jobs report last week. “That makes sense.”

Big Number

$12 billion. That’s how much local economies in the 24 red states that had announced an early termination of the $300 federal supplement as of June 2 are expected to lose as a result of ending the benefit early, according to a report from Congress’ Joint Economic Committee.

Surprising Fact

On Thursday, Louisiana became the first state with a Democratic governor to announce the early expiration of the $300 supplement. The other 25 states have Republican governors.

Key Background

An emergency federal unemployment insurance supplement was first authorized in the amount of $600 per week as part of the CARES Act last year. A new supplement of $300 was authorized by executive order under President Trump after the first supplement lapsed. The $300 supplement was extended once by Congress as part of a stimulus bill last December, and again by Congress as part of President Biden’s $1.9 trillion American Rescue Plan.

Further Reading

Louisiana’s John Bel Edwards Becoming First Democratic Governor To Cut $300-A-Week Federal Unemployment Benefits (Forbes)

Biden: It ‘Makes Sense’ That $300 Unemployment Will End In September (Forbes)

California And Florida Are Sending Out More Stimulus Checks. Could Your State Be Next? (Forbes)

IRS Releases Child Tax Credit Payment Dates—Here’s When Families Can Expect Relief (Forbes)

Source: Here’s What Could Happen When $300 Unemployment Expires, According To Goldman Sachs

I’m a breaking news reporter for Forbes focusing on economic policy and capital markets. I completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance.

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Critics:

Several coronavirus relief bills have been considered by the federal government of the United States:

The American Rescue Plan Act of 2021, also called the COVID-19 Stimulus Package or American Rescue Plan, is a $1.9 trillion economic stimulus bill passed by the 117th United States Congress and signed into law by President Joe Biden on March 11, 2021, to speed up the United States’ recovery from the economic and health effects of the COVID-19 pandemic and the ongoing recession.First proposed on January 14, 2021, the package builds upon many of the measures in the CARES Act from March 2020 and in the Consolidated Appropriations Act, 2021, from December.

Beginning on February 2, 2021, Democrats in the United States Senate started to open debates on a budget resolution that would allow them to pass the stimulus package without support from Republicans through the process of reconciliation. The House of Representatives voted 218–212 to approve its version of the budget resolution.

A vote-a-rama session started two days later after the resolution was approved, and the Senate introduced amendments in the relief package. The day after, Vice President Kamala Harris cast her first tie-breaking vote as vice president in order to give the Senate’s approval to start the reconciliation process, with the House following suit by voting 219–209 to agree to the Senate version of the resolution.

Prior to the American Rescue Plan, the CARES Act from March and in the Consolidated Appropriations Act, 2021, from December were both signed into law by then-president Donald Trump. Trump previously expressed support for a direct payments of $2,000 along with Joe Biden and the Democrats. Even though Trump called for Congress to pass a bill increasing the direct payments from $600 to $2,000, then-Senate Majority Leader Mitch McConnell blocked the bill.

Additionally, the House voted on the HEROES Act on May 15, 2020, which would operate as a $3 trillion relief package, but it wasn’t considered by the Senate as Republicans said that it would be “dead on arrival”.Prior to the Georgia Senate runoffs, Biden said that the direct payments of $2,000 would be passed only if Democratic candidates Jon Ossoff and Raphael Warnock won; the promise of comprehensive Covid-19 relief legislation was reported as a factor in their eventual victories.On January 14, prior to being inaugurated as president, Biden announced the $1.9 trillion stimulus package.

See also

15 Content Marketing Statistics that Prove the Value of Your Efforts

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Let’s take a pause. You’ve been running on the content hamster wheel, hopefully executing on an informed and actionable content marketing strategy. But what’s it all for? Why are we doing it in the first place?

Let these 15 content marketing statistics remind you that, yes, you are on the right path.

For starters, in 2019, roughly 25.8% of internet users were blocking advertising on their connected devices. Ad targeting is going to get increasing more complex with new privacy regulations being introduced and the implementation of cookie-blocking technology being led by Apple and Firefox.

Advertising will continue to become increasingly more expensive and complex. And not to mention, consumers prefer content to advertising.  In fact, 70 percent of people would rather get information about a company or learn something from an article or blog post rather than from a traditional advertisement. (Demand Metric)

70% of people would rather get information about a company or learn something from an article or blog post rather than from a traditional advertisement. Click To Tweet

Throughout the funnel, good content is becoming increasingly important. Whether creating your own, aggregating content from experts or facilitating UGC, content can bring exponential value to your marketing efforts.

Let’s take a look at the impact of content throughout the marketing funnel with these 15 content marketing statistics:

1. Knowing your audience and understanding their preferences is essential. For instance, only 22% of millennials want to see email from a brand they support, while 57% of 45 – 54-year-olds do. (HubSpot)

2. Conversely, 52% of millennials want to see video from brands they support while only 25% of those 45-54 do. (HubSpot)

3. 71% of a B2B respondent pool stated they reviewed a blog while on their buying journey. (Demand Gen Report)

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4. 32% of consumers check out a brand’s social media presence before checking out their website. (Animoto)

5. Podcasts were cited by 64% of B2B respondents as a valuable content format in the early stage of the buying journey — only falling short of infographics (76%) (Demand Gen Report)

6. People today have 2X more interactions with brands on mobile than anywhere else. (Think with Google)

7. Cisco projected that more than 80% of all Internet traffic will be video by 2021—which means brands definitely need a video content strategy. (Cisco)

8. 87% of consumers want more video from brands. (Hubspot)

9. Instagram is the fastest-growing platform for driving purchases with video. (Animoto)

10. When asked how they’d most like to learn about a new product, over two-thirds (68%) of consumer said a short video would be best, way ahead of text-based articles (15%),infographics (4%) presentations and pitches (4%) ebooks and manuals (3%). (Wyzowl)

11. 65% of B2B content consumers strongly agree they have higher preferences for credible content from industry influencers. (Demand Gen Report)

12. 73% of consumers have been impacted by a brand’s social media presence when making a purchase decision. (Animoto)

13. Per dollar, content marketing produces 3 times more leads. (Kapost/Oracle Eloqua)

14. Content marketing generates over three times as many leads as outbound marketing and costs 62% less. (Demand Metric)

Content marketing generates over three times as many leads as outbound marketing and costs 62% less. Click To Tweet

15. On average, content marketing costs 41% less than paid search, (Kapost/Eloqua)

On average, content marketing costs 41% less than paid search Click To Tweet

If this feels overwhelming and you still find yourself on the hamster wheel day after day, unclear of what to create and where to distribute it, you are not alone. In fact, only one out of three B2C marketers surveyed in CMI/Marketing Profs 2019 B2C Research Study had a documented content strategy.

Only one out of three B2C marketers surveyed in CMI/Marketing Profs 2019 #B2C Research Study had a documented content strategy. Click To Tweet

To help you up-level your content marketing efforts, we created  a 7-page content marketing guide. Fill out the form below to grab your copy of What Great Brands Do That Good Brands Don’t in Content Marketing now.

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https://newhorizons123.com/video-prod… 1) Content marketing costs 62% less than traditional marketing endeavors yet generates 3x the amount of leads. 2) 51% of B2B marketers prioritize creating visual assets as part of their content marketing strategy. 3) 54% of marketers feel they’re not maximizing their use of Instagram to achieve their goals. 4) 74.2% of companies say content marketing increased their lead quality and quantity. 5) In 2019, 84.5% of US companies with at least 100 employees will utilize digital content marketing strategies. 6) 71% of buyers/readers say they were turned off by content that seems like a sales pitch. 7) Content marketing will be a 300 billion dollar industry by 2019. 8) Marketers who prioritize blogging efforts are 13x more likely to see positive ROI. 9) There are over 2 million blog posts published daily. 10) 52% of buyers strongly agree that if brands packaged relevant content together, it would help expedite the research phase. 11) 93% of B2B marketing professionals use content marketing. 12) B2B marketers spend 39% of their budget on content marketing. 13) By the end of 2019, Cisco estimates show 80% of all internet traffic worldwide will be video. 14) 61% of the most effective B2B content marketing professionals meet with their content teams daily or weekly. 15) Companies that implement content marketing strategies see 6x higher conversion rates than those who don’t. 16) Content marketing produces 3x the amount of leads as traditional marketing. 17) Companies that put their primary focus on content marketing generate more than 5x more conversions. 18) 28% of marketers have reduced their advertising spend to allocate more funds towards content marketing. 19) 78% of Chief Marketing Officers believe that custom content is the future of marketing. 20) 73% of organizations have someone in place to oversee their content marketing strategy. 21) 74% of CMOs have little to no confidence they have the right technology in place to achieve their marketing goals. 22) 86% of very effective organizations have a head of content strategy. 23) 48% of small companies have a documented content marketing strategy, whereas 41% of larger organizations have one. 24) Going forward, the projections reveal that video is likely going to comprise 82% of internet traffic by 2021. 25) About 90% of B2B buyers have expressed that online content greatly influences their purchasing decisions. Sources: DemandMetric: https://www.demandmetric.com/content/… HubSpot: https://www.hubspot.com/marketing-sta… Contently & Libris: https://contently.com/resource/libris… Curata: http://www.curata.com/resources/ebook… eMarketer: https://www.emarketer.com/content/who… Economist Group’s “Missing the Mark”: https://www.slideshare.net/LeanBack1/… Demand Gen Report 2018 Content Preferences Survey Report: https://www.demandgenreport.com/resou… CMI + MarketingProfs: http://www.iab.net/media/file/B2BRese… TopRank: http://www.toprankblog.com/2014/05/b2… IAB: https://www.mediapost.com/publication… CMI: http://contentmarketinginstitute.com/… Marketeer: http://marketeer.kapost.com/wp-conten… Kapost: http://resources.kapost.com/aberdeen-… Gartner: http://www.gartner.com/technology/res… Demand Metric: http://www.demandmetric.com/content/c… Nielsen CMO Report 2018: https://www.nielsen.com/us/en/insight… Cisco: https://www.cisco.com/c/en/us/solutio… #contentmarketingstatistics #digitalmarketing #videomarketing