I have to ask you do you think in terms of the contagion effects that we've seen in the Chinese property sector have we seen the
worst of it or is now there a sense that this could actually spiral out of control.
Yes we are still seeing the market pretty challenging in the next six to 12 months period because sales remain weak and bond
price has been coming down. Wow. Actually making the Chinese developers financing access be constrained. So that also
increased our refinancing risks. And in terms of the sales and although we see the government has tried to implement some
measure or using some policies to stabilize the sales of steel we have seen
national sales and property developers sales declining. So indicating that there is still more downside uncertainties in
terms of still operations and has also translated to some funding uncertainties and risks.
Yeah. If you know if other agencies can actually downgrade names like country garden to junk I have to wonder how much
transparency is there in the sector right now for you even. And how do you even begin. What metrics do you look at to value
these companies. Now we monitor the market in different areas including the national
sales data. How so. Although markets performing and often then you also look at individual companies financial positions
including down from the contract sales and also some see credit metrics and more. Most importantly right now is something that
you really look at our liquidity position in terms of the cash position and just short term
financing needs. All these key metrics are still available actually from Florida. Do the financials and also company
announcements so that we can still have information to assess these credits.
CAVE and David here. Do you think these projects are eventually going to get completed. All of them.
This is something we still need to monitor for unfinished apologists. Although this is definitely a recent poll from
Stanford we have seen the kind of hope this activist government has also tried to come up some matches to support these
unfinished projects. And having said that government funding to support these projects and in terms of scale remains uncertain.
But we believe that the government will soon be selective in supporting these
projects and those more viable will be selected and allow and more distressed and they will be put on a later stage. And then
in the near term we do not really expect that that all of these project can be can be supported
in terms of the financing options for it. For many of these companies what mainly do you think that's going to be. Because
it doesn't seem to offshore market is a viable alternative. Is it the onshore market. Is it. Is it banks. What what what
alternatives are they looking at here. We still see most of the rate of developers still have access to
onshore bank financing mostly for project developments. Some quantity names. We also see that they are able to assess onshore
bond markets. Recently you can see some high quality names that they issued onshore bonds. Also bond definitely is especially
difficult on them and other than these kind of funding channels. We also see some Chinese developers trying to dispose of their
assets to raise funds to meet their operating lease as well as to meet their refinancing needs.
Karen when do you expect to see a peak in defaults then in the property sector now.
It is a different code to activate the timing the timing of a peak. Hope we see you forecasting that more companies will
default in the next six to 12 months periods. Considering that many of them develop personal acquaintance you remain quite weak
particularly those actually rate and a very low level. Talking about these three or below and they have weak operation to be
liquidity. At the same time they also have to be financing these and now very sudden access to funding to get the refinancing.
These companies are still seeing refinancing rates and therefore we still expect that that more common these types of companies
real default came in just on the extent of the recovery. Is there an
oversupply a structural issue in the property sector. And I would say the supply situation is very dependent on the
location in different regions. Data will be having a different supply demand dynamic based on what is understanding about the
situation. That's all the supply situation. My concern is more in the lower tier cities particularly in some regions that is
less developed including east each northeast region and also southwest region. The programs would be more serious than.