Tracking Credit Events at LGFVs

The downturn in China’s property market has significantly slowed the economy over the past year. One major casualty is local government financing vehicles (LGFVs), as declining land sales revenues reduce local governments’ capacity to support these firms. Additional credit events at LGFVs will emerge in the months ahead. Corporate acceptances are the first products facing defaults, while LGFVs are still trying to avoid defaults on publicly traded bonds.

Posted September 26, 2022
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Property Market Chartbook, September 2022

Property sector indicators continued weakening in August, and 30-city sales so far in September have declined by 42% y/y. A widely anticipated broader policy support package for the sector has not materialized, but the smaller decline in completions suggests Beijing has gained some traction in finishing stalled housing construction. Sharp declines in land sales (-57%) and new starts (-47%) virtually guarantee that the slowdown in construction activity will extend into the first half of 2023.

Posted September 21, 2022
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August 2022 China Macro Data Recap

August macroeconomic data pointed in conflicting directions, with industrial production and retail sales above expectations, while exports and inflation indicators moderated. Sequential momentum in the economy remains weak amidst COVID restrictions and continued declines in residential property construction, while auto sector activity and base effects flattered headline growth rates. Credit growth has picked up, supported by infrastructure-driven lending from policy banks.

Posted September 16, 2022
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