Evergrande collapse Part 2

Evergrande collapse Part 2Show more

Lots of heartache happening with Chinese property investors right now. People are protesting wanting their money back from the Evergrande group.

This is why we believe Evergrande will not collapse. At least not as catastrophic globally as the GFC had.
The CCP (which is the Chinese Communist Party) will change the narrative in the news - to crush dissent.

The Ccp will likely take control of the company and split it into smaller less powerful entities - Every business in China ultimately belongs to the CCP, and they have complete control of the banks and the media. They can always stop things from crashing with new rules or restrictions being put on businesses.

Evergrande makes up about 2% of the total Chinese economy - That's huge
and 7% of the property market.
Most Chinese investors put their hard earned into property and very little on the sharemarket.
The Chinese govt can't let this company collapse - they have the power to crush dissent.
The Govt Pushes back on billionaires
They are shutting down capitalism whenever it suits their needs to stay in power and control the people.
They take away power from people who may potentially gain more power than the govt.
All Chinese real estate companies have big debts as well - so it's not just limited to Evergrande.

If the Chinese govt doesn't bail out Evergrande then there will be massive mistrust towards the govt.
The only thing that can bring down the CCP is an economic failure of the Chinese people.

There is local debt and foreign debt - Foreign investment will be paid back last (if at all) after local investors are paid out first.
What will likely happen is...
The govt can lean on the banks to extend the loans on evergrande ie the banks will bail the company out and not the govt
The Chinese govt will not chase a collapse.
The Evergrande issue will not have the same effect as the GFC, but it will wake up people with some downturn impact both doemstically and globally.

So what do we think the chart will show?
The chart patter is showing a down sloping triangle.
There is no guarantee of this occuring but likely, price movement of the falling trend line will intersect with the support line. If price breaks down through this support, then there will be strong continuation of the down trend.

Using a Daily price chart, we review the weekly progress of a sample of Bluechip stocks from Australia, the US and Europe - Telefonica (TEF.BME), Commonwealth Bank Of Australia (CBA.AX), BHP Group Ltd Australia (BHP.AX), JPMorgan and Chase (JPM.NYSE), Volkswagen AG (VOW.XETRA), Johnson & Johnson (JNJ.NYSE), Caterpillar Inc (CAT.NYSE).

Showing any new open and closed positions, profitability and draw down requirements dependent on the trend of the respective price charts.
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