Share Picks 2021 - Thread banned users post #1

90 minutes to Shanghai reopening after the Autumn holiday.

Evergrande's woes, the possibility of a flight to cash in China and the knock on effect of any contagion are all coinciding with a Fed meeting and the US still not agreeing new debt ceiling. Plenty of other market risks at play currently too but I think that 1:30am and just how the Chinese market reacts will speak volumes as to whether this is a bump or a cliff.

Yesterday's losses and today's flat market point towards institutional worries re:risk IMO.

Will check in in the morning and likely find I'm wrong 😉😂

Good luck to anyone in on Chinese equities.

I'm not entirely sure what to make of the relative flatlining today but I imagine that Evergrande/China/RoW are by no means out of the woods yet. This could be a slow bleed process over many weeks and months instead of simply exploding one day the market opens. Those repayments for Thursday are alleged to have been taken care of but what about the next repayment and the next? And can we infer from this development that to some extent the CCP has decided to step in and work some sort of magic from the wings?

The onshore bond was denominated in Yuan and there has been zero mention of what kind of discount (if any) was negotiated on that coupon. The PBOC are providing liquidity to the market but no detail on the structure of that support seems to be available just yet.

Tomorrow will be far more interesting IMO, as an offshore dollar denominated coupon is due. This will give a clearer picture of what the PBOC intend to do. My current thinking is that they aim to support the Onshore debt as it is primarily Chinese and the Chinese "middle class" in particular that are exposed to the Evergrande debt. The investment options available to mainland Chinese are quite limited due to capital controls and they are even crazier for property than the Irish.

My thinking is that the PBOC aim to protect that segment by at the very least softening the blow to local coupon holders. The USD debt due tmrw places an FX burden on the PBOC if they cover the payment. Not an obligation they want and one that even taking on the assets of Evergrande won't offset.

The options are IMO China nationalises it which I think is unlikely, or it forces a restructuring on Evergrande with a debt for equity swap. That would aim to protect their domestic investors and ensure that there is a continuation of confidence in the market structure in China at the very least.

JP Morgan have alluded to other banks carrying risk by their highlighting how the are carrying zero counterparty credit risk.

The risk of further contagion is IMO very much based around the default impacting upon unconnected counterparties who are using CDS derivatives and similar vehicles to gain exposure to this market.

Sell Sell Sell!

My buy order says rejected in my activity section! What the hell. Really annoyed at that. Why would that happen?

Edit: Nevermind. In my history section is says rejected, but it is listed on my portfolio. Strange.

A question I have is why is it listed as "Non-tradeable"? Should it not merge with the original listing?

Finally QS is on a run...

Yeah, still holding PSTH. At this stage it's trading at $19.73 - when they complete the deal, we'll get $20 plus a warrant in a new SPAC so might as well hang on now. Might clear this month or 6 months, that's the main problem.

Also, have ya seen what UMG did this week? That's what PSTH was supposed to get shares in - up 35% on IPO day

I know, with PSTH Ackermans reputation is on line....hope he pulls a rabbit out of the hat.

That is sickening

I hadn't raised the moral hazard question myself but I see the Guardian do and if it was a "Western" market I'd feel a bit more comfortable opining on it.

As I honestly couldn't comment in how China would view that aspect of any action they take, without guessing. In western markets it's a mode of market protection that is borne out of capitalism as an ideology IMO.

In a market structure that sees capitalism and in particular excess individual wealth as an anathema? Surely the moral hazard for China would be in allowing continued unrestrained market excess?

I suggested a couple of options that the Chinese might pursue and I personally think it will be a path of insulation for the internal market and in particular the individual investors.

I see that happening by splitting Evergrande into separate units, Housing, Commercial, EV and so on, lumbering the offshore debt on everything but the housing arm and offering debt for equity swap at best on those arms.

The housing arm, either nationalised or folded in to other property companies with the buyers protected and the buildings finished. Currently residential property is far too important an economic marker for China for it to be abandoned.

Offshore bondholders are going to be burned, it's IMO just a question of how badly. That fire will spread based on the amount of derivatives with Evergrande and other Chinese debt wrapped up in them IMO? The divestment of that risk cannot be immediate but the hedge for it is what I'm off to start looking for. Not for me, I have zero exposure but I think that if a hedge can be identified? Movements on that market will give a more reasoned value to the current risk.

Hello folks, just wanted to knowwhat are peoples general view about crypto at this stage...On one hand we have some countries who made it a legal tender but on other hand China making crypto transactions illegal....my view is it'll continue to prod along and would be willing to accumulate a bit more of Argo and may be Mara if it dips further. I added good few of Argo in the last dip when they went under 100p and have been recovering nicely until last week.

What's this got to do with Share picks?

Still happy to hold Argo. It floated on Nasdaq this week and discounted the share price to entice institutions. It caused a pullback for any existing shareholders. Sucks for us, but it's what most companies do when uplisting. It should do well once it settles.

Crypto is just an elaborate ponzi scheme. Sit down and work out the intrinsic value of any crypto currency. That will tell you, all you need to know.