China's Bank Loans Drop to Worst Since 2017 As Economy Slows

The video discusses the challenges facing China's economy, particularly in the property sector, where mortgage demand has plummeted, affecting home sales and developer cash flow. The China Credit Tracker shows high stress in offshore bonds, with significant losses in dollar bonds. The video also highlights the broader market contagion and the misconception that exiting COVID-19 restrictions will resolve systemic issues. Local government finances and debt servicing remain concerns, compounded by ongoing COVID-19 cases.

What has been a key problem for the Chinese property sector in recent times?

• Increase in home sales

• Decline in mortgage borrowing

• Rise in property prices

• Surge in foreign investments

What was the second biggest loss ever recorded in a Bloomberg index tracking the high yield sector?

• A 3% loss in perpetual bonds

• A 20% loss in offshore bonds

• A 12% loss in dollar bonds

• A 5% loss in investment grade bonds

What recent event has contributed to the stress in the bond market?

• A Korean insurer not calling back a bond

• A surge in property sales

• A rise in local government investments

• An increase in tax revenue

What is a major concern for local government financing vehicles in China?

• High levels of foreign investment

• Ability to service their debt

• Excessive tax revenue

• Surplus in cash flow

How might COVID-19 lockdowns affect the Chinese property market?

• Challenges in completing home sales

• Boost in local government finances

• Improvement in builder cash flow

• Increase in home buyer confidence