Evergrande's multi-billion dollar house of cards is about to collapse. The administration in Beijing would like to avoid this, a reconstruction would be the better solution. It is questionable whether it will succeed. The bubble is collapsing across the country and more property developers are heading for difficulties. It is difficult to quantify the risks. Even with the Evergrande Group, the amount of actual debt is not clear. A team of experts is now scouring the assets on instructions from Beijing after the company is unable to get the crisis under control on its own.
The most important events from a (predominantly) automotive point of view. Evergrande Auto (HK 0708) stock lost nearly a quarter of its value yesterday. The biggest loss in the day in recent times and near a collapse. The price recovered somewhat today, gaining more than 2% and trading at almost HKD 4 (€ 0,44).
However, a trend reversal is not in sight. One thing is certain, Evergrande will be in the coming days Payment deadlines to let sth. pass. US $ 84 million would have to be serviced on September 23, with no cash available. Chinese media report of 1,5 million buyers who have paid for their homes or have paid in full, but who are still waiting for Evergrande to start construction. Mass protests broke out in Shenzhen today, with pictures and videos on social media showing protesters in front of the Evergrande buildings.
The founder's luxury life
Meanwhile, the press takes on the luxury life of the Evergrande founder. A remarkable process that would have been unthinkable a few weeks ago. It allows conclusions to be drawn about the possible (social) crash of Hui Ka Yan. Two luxury villas in the very best Hong Kong location are ascribed to him. They belong to an Evergrande company, which is headed by the family butler as managing director.
The rent of each luxury villa is the equivalent of € 65.000 per month and the houses should have a combined value of US $ 200 million. Hong Kong is one of the most expensive cities in the world, but the population in general is less representative.
Waiting for investors
Evergrande is still in talks with potential buyers and investors. The question of whether the Hengchi brand will survive or not is open. Maybe that is also uninteresting. Likewise, the question of whether Evergrande Auto will continue to exist. The only thing that matters is what happens to the billions in investment. Also from our point of view. Because large parts of the European supplier structure are involved in the project.
You could easily stick another trademark on the cars themselves. Nobody would mind. It is noticeable that more and more vehicles have been spotted on test drives in China in the last few days.
A signal for investors or buyers? Obviously, because at least one vehicle from Evergrande Auto should be ready to get into that Production to go.
Depression in Trollhättan
The press reports about NEVS and the thin thread, on which the fate of the company depends, philosophizes. In any case, the impressions on site are depressing. A friend drove his electric car (which is not from NEVS) through Stallbacka on Monday on the way to Gothenburg.
Trollhättan in the rain, gray on gray, can alone be a reason for depression. Empty parking lots and abandoned buildings in the early afternoon are also common. He reported that he had never seen the former Saab site so desolate in recent years.
Only the security guards do their laps lonely. Is it over in Sweden again?