Peak Ponzi: Domino Theory


Companies like Evergrande. Junk companies borrowing USDs at 20%+ comprising ~35 “significant” companies representing 12.5% of the current market cap of the Red Ponzi property sector has already lost some $500 billion to date.

These companies develop and sell the 85% of homes bought as investment property – speculators – facing to be a serious revaluation of home prices in China, as many of these homes are empty and are out of the price range for new homebuyers.

Source: Financial Times

Minsheng Bank. Lost over half of its market cap over the last few months and currently facing a default probabiltiy of ~20%.  

Ping An. Insurer with a bit of toxic waste on the balance sheet starting witha property company called China Fortune Land. The investment portfolio is leveraged 10X, and the CEO and company are under regulatory investigations. Wealth management products sold to millions. Ping An is systemically important with dollar bonds spreads widening 40 bps last week.

Equity Market. $300 billion worth of margin loans – a lot of tinder waiting for a margin call.

And so, here we sit with global energy prices spiking throwing some deadweight into the mix.

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