I’m reaching out with critical insights on the global economy, echoing past financial pitfalls.
If you’ve noticed a decline in your industry, the storm might already be upon you.
Remember Japan’s 1980s asset bubble caused by excessive loan growth quotas from the Bank of Japan? This crippled the Japanese economy and sent shockwaves through the world.
China seems to be on a similar trajectory, with Evergrande at the forefront. This behemoth, once China’s largest real estate investment company, has been suspended from trading Thursday! Amid grave concerns about its escalating debt.
Astonishingly, Evergrande’s liabilities stand at $353 billion, roughly equivalent to Finland’s GDP. This situation underscores a potential debt crisis enveloping a quarter of China’s economy, deeply rooted in its property sector.
However, Evergrande’s financial reach isn’t limited to real estate which makes it even more concerning. Their vast endeavors span across:
Electric vehicles (intended to produce 5 million cars annually to challenge Tesla). “Evergrande spring” claim to be Chinas largest water source.
They owned 4 professional football teams,
15 theme parks under their “Fairy Land” brand, To compete with Disneyland.
All these ambitious projects, despite their scale, are precariously propped up by swelling debt, especially as most haven’t turned a profit.
Here is some alarming data:
70% of Chinese household wealth is anchored in real estate.
A significant data leak from the Chinese Police suggests the population stats have been over counted by100 million people.
Property developers used this data to predict how many properties were needed. * Which created a vast over supply.
Resulting in a mass shortage of new homebuyers.
Youth unemployment stands worryingly at 21%.
The construction sector has seen a decline of over 25%.
In some areas, property prices have declined 25%.
Evergrande has invested in some Belt & Road Initiative related projects.
The BRI is one of the boldest economic projects ever conceived, spanning more than 140 countries and requiring an estimated US$8 trillion in investment
Furthermore, other giant real estate investment companies like Country Garden hold a debt of 109 Billion Yuan, with cash reserves barely covering 101 Billion Yuan. They lost $7.2 Billion dollars in the first 6 months of 2023.
Chinese developers are drowning in debts exceeding $5 trillion!!
Given the interconnectedness of global economies, China’s impending crisis could have cascading effects worldwide. Analogous to the 2008 financial collapse, fine wine assets historically appreciate during such turbulent times.
For instance, in 2008, fine wine experienced a significant upswing as investors scrambled to put money in safe assets.
Predictions indicate a strong 3-5 year outlook for wine investments. If you’ve not ventured here, the window might be narrowing as prices are set to climb.
If you’re intrigued about opportune investments below market value, please let me know and ill negotiate a good recommendation for you.
It is a good place to park some funds right now as we await the crisis that is looming.
You can easily do a google search, if you want to verify these facts i’ve provided to you.
It might be the best 10 minutes you spend this year.
Europe’s No 1 Wine Investment Analyst
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