China’s Housing Market Owes $2.9B in Debt Payments by December 2021
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China’s Housing Market Owes $2.9B in Debt Payments by December 2021

With its future looking bleak, the Chinese real estate market faces crises as property developers are struggling to meet loan repayments.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

China’s housing market woes continue to deepen as more of its big players face looming deadlines for debt repayments. With Evergrande already on the verge of collapse, there are growing concerns about other construction giants meeting their debt obligations. This is estimated to be at least $92 billion in bond payments over the next year.

Increasing Debt In China’s Real Estate Business

Evergrande’s struggle to raise cash to meet its payment deadline continued this week as it missed its $150 million payment deadline on Monday. With its future looking bleak, the Chinese real estate market faces crises as other property developers are also struggling to meet looming deadlines for loan repayments.

Credit analyst, Himanshu Porwal of Seaport Global’s EM Corporate highlighted October 15 – December 17 as a critical period to watch out for debt repayments this year. Several property firms face debt payment within this timeframe. Shimao ($820 million), Xinyuan ($229 million), Sinic ($244 million), Seazen Holdings ($100 million), Central China Real Estate ($400 million),  Agile ($200 million), Zhenro ($200 million), Ronshine China ($150 million), Kaisa ($400 million), and Fantasia ($249 million) are the affected companies.

Data from the Shanghai Stock exchange revealed that property firms made up the top five losers among exchange-traded bonds issued. This raises serious concerns as the Chinese property market is valued at $5 trillion, a whopping 25% of the Chinese economy, and often influences policy making. 

Brokerage firm CGS-CIMB had this to say on the issue, “We see more defaults ahead if the liquidity problem does not improve markedly.” The note further highlighted that developers with low credit ratings would have a difficult time refinancing debt.

Is China’s Bitcoin Ban Priced In?

China’s most recent crackdown on digital assets saw an outright ban imposed on all crypto-related transactions. This has been its most stringent restriction on the sector thus far, leading to several miners moving to other countries to continue operations. 

In the wake of its ban, Bitcoin’s price witnessed a sharp decline of more than 8% before stabilizing above the $40,000 price level. The price reaction was relatively muted compared to previous bans, leading analysts to believe that Bitcoin prices had already been priced in the FUD.

Source: TradingView

Microstrategy CEO Michael Saylor questioned the ban on Twitter.

Since the ban in September, crypto asset prices have largely rebounded. This has coincided with the bullish sentiment usually associated with the last quarter of the year. Historical data shows that this period is bullish for Bitcoin. This combined with Bitcoin’s quick rebound points to Bitcoin being more resilient to market influences. This makes it a suitable option for investors in the face of the imminent crisis in the Chinese property markets.

The frenzy seems to be taking off as crypto enthusiasts show their excitement through astronomical price predictions.

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Is Bitcoin Set Up For a Bull Trap?

As Bitcoin’s bullish sentiment continues to grow and is increasingly viewed as a safe-haven asset, investors are advised to be cautious. Market Analysts Tone Vays alerted Bitcoin traders to certain bearish signals: 

“But I don’t like the oscillators on the four-hour timeframe, and it’s coming into an MRI [momentum reversal indicator] top. So you really want to be careful here. You want to be a little bit cautious… So this is of concern. This is not normal. You don’t normally get a bearish CMF as the price is breaking out to a new high. That is very, very rare. That’s what happens when your volume is declining so badly.”

The Chaikin money flow (CMF) indicator is a technical oscillator used in tracking volume to identify periods of accumulation and profit-taking. Vays highlighted BTC’s tapering volume despite its recent ascent and predicts a pullback before pushing further.

The fear and greed index currently indicates extreme greed, which brings bearish sentiment to the picture.

Source: @BitcoinFear

Investors need to be careful to ensure a bull trap does not blindside them. As the fear and greed index tilts to the extreme “greed” zone, it could be a sign for investors to apply discretion in their trades. This narrative agrees with a renowned statement from a prominent investor, Warren Buffett’s who advises investors to “be fearful when others are greedy. Be greedy when others are fearful.”

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Is Bitcoin a safe bet for Investors in the face of the looming property market crises in China? Let us know in the comments below.