The FTSE

Gaudion M said:
Yes - lots of talk on it in the Banking world. Essentially a big test for the Chinesse financial sector. It will be very interesting to see how it plays out. It could be like a normal default where investors and banks absorb the losses - this could spread with smaller Chinese banks going under and then contagion etc etc... If it is allowed to unwind like this then given the global reliance on China for manufacturing its a big bump in the rd. But I think most expect the government to step in to avoid the nightmare scenario.
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My tuppence worth: Highly likely to default (nothing shocking in that statement), unlikely government will step in directly - after all these are the policies it adopted playing out. Likely China government will engineer a managed restructuring, estimates are around 45-55% recovery on debt but bonds currently trading lower to reflect blended risk of not honouring the USD denominated bonds. Impacts on domestic property market, expectation China will loosen current property policies to prevent contagion - this approach seems likely given the closed financial system and interventionist regulators.

Non-CNY bonds are, I think, about $20bn or so of total debt pile so not too troubling.
 
metalblue said:
My tuppence worth: Highly likely to default (nothing shocking in that statement), unlikely government will step in directly - after all these are the policies it adopted playing out. Likely China government will engineer a managed restructuring, estimates are around 45-55% recovery on debt but bonds currently trading lower to reflect blended risk of not honouring the USD denominated bonds. Impacts on domestic property market, expectation China will loosen current property policies to prevent contagion - this approach seems likely given the closed financial system and interventionist regulators.

Non-CNY bonds are, I think, about $20bn or so of total debt pile so not too troubling.
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I’m much in agreement although if I had to pick a side either side of yours, it would actually be the rosier side with a nationalised bailout.
 
SWP's back said:
I’m much in agreement although if I had to pick a side either side of yours, it would actually be the rosier side with a nationalised bailout.
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Looking forward to the BBG headline mate; Commies in capitalist bailout shocker! Peasants pay for the reckless excesses of the greedy bankers. World will have turned on its head.

There is a lot of support for your view as China needs to show it can be trusted with credit. It’s going to be fascinating watch.
 
metalblue said:
Looking forward to the BBG headline mate; Commies in capitalist bailout shocker! Peasants pay for the reckless excesses of the greedy bankers. World will have turned on its head.

There is a lot of support for your view as China needs to show it can be trusted with credit. It’s going to be fascinating watch.
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I’m just pleased western civilisation as we know it didn’t go down the toilet with that vote in the senate yesterday tbh.
 
metalblue said:
Looking forward to the BBG headline mate; Commies in capitalist bailout shocker! Peasants pay for the reckless excesses of the greedy bankers. World will have turned on its head.

There is a lot of support for your view as China needs to show it can be trusted with credit. It’s going to be fascinating watch.
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The "commies" are capitalists, only without the drip down.
 
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