China's largest real estate company, Evergrand Group, showed 'insolvency' with a deficit of 580 billion yuan with debt of 2.5 trillion yuan, and real estate funds of domestic commercial banks, which invested heavily in Hong Kong, went bankrupt, causing serial damage to bank investors. done.
China Evergrand Group announced on the 17th the results for the December 2021 fiscal year, which was postponed last year.
On the 18th, Multi Asset Asset Management, an affiliate of Mirae Asset Group, destroyed 80-100% of the ‘Multi Asset Professional Investment Private Real Estate Investment Trust No. 4’ fund sold in April 2019 through domestic securities companies and commercial banks for a scale of 200 billion won. As the write-off was scheduled, a wave of overseas real estate fund securities began in domestic banks.
Yomiuri said, “As a result of accounting, the final profit reached a two-year total deficit of about 580 billion yuan (about 11.2 trillion yen) with losses for two consecutive years. About 47 trillion yen), it appears to be insolvent,” it reported on the 18th.
Real estate specialist Evergrand's debt is equivalent to 2% of China's gross domestic product (GDP).
Everland's real estate sales plummeted last year, falling to 230 billion yuan, less than half of what it was in 2020.
“In addition to depreciation of properties held for sale or under development, losses from falling financial asset prices have also spread,” said Yomiuri. said.
Domestic media began reporting on the 18th that the Hong Kong Goldin Financial Global Center (GFGC Building) 280 billion won loan fund securities, which domestic commercial banks sold intensively to large depositors for four years, would go bankrupt on the 18th. Mirae Asset, Korea Investment & Securities, and Eugene Investment & Securities invested 20 to 40 billion won each with their own funds in the June mezzanine loan of $243 million (about 280 billion won) in the building.”
Commercial banks turned securities companies' loan products into securities and sold them as retail units to high net worth individuals.
The Bank of Korea union invested 2 billion won, half of the union fee, into the Hong Kong real estate loan securities.
Commercial banks have intensively sold overseas real estate funds designed by domestic securities firms for four years, and the total net assets now amount to 77.7035 trillion won, the Korea Investment & Finance Association announced on the 17th.
Overseas real estate funds have soared by more than 40% to KRW 55.5435 trillion as of 2019, and investment destinations attempted by securities companies are high profit and low risk if more than 70% are concentrated in office buildings in central overseas areas according to the hypothesis of 'stock market V-level rebound from pandemic' By making it a product, banks concentrated on the elderly and retirees, who account for a high percentage of deposits among their customers.
The U.S. Federal Reserve has already published this “Commercial Real Estate Loan Risk” report on May 11, and the U.S. has seen up to 10% drop as deposit outflows from local banks, where loans are concentrated, have increased.
Regarding commercial real estate risk in its annual Financial Stability Report at the time, the Fed said, “rising interest rates over the past year ‘increase the risk’ that commercial borrowers may not be able to refinance their loans at the end of their loan term.” is still 'rising', and the magnitude of the adjustment in property values could be significant, thus leading to credit losses for commercial real estate debt holders."
The bankruptcy of Signature First Republic, a small bank specializing in lending, began here, and South Korea wrapped it up in an intricately designed loan-based financial product that banks sold to depositors.
At the time, the commercial real estate pointed out by the US Fed has grown to $ 2.3 trillion by 2022 in a low interest rate situation.
After the Democratic Party-led Senate rejected the US Republican Trump regime's $2 trillion stimulus package on March 23, 2020, the Fed began unlimited purchases of US Treasuries, corporate bonds, and MBS purchases.
The Federal Open Market Committee (FOMC) statement on the same day revealed the “decision to purchase unlimited bonds,” and as the stimulus package was expanded to commercial MBS (commercial MBS) in addition to corporate bonds and residential real estate, commercial real estate fell two years later. The bankruptcy of the lending bank has begun.
At the time, the justification for unlimited purchases was to prevent the price of asset-backed securities (ABS) from collapsing, but real estate loan banks in the United States appeared insolvent. It tried to stimulate the economy by selling intensively as fund securities.
<The U.S. Federal Reserve’Commercial Real Estate Risk’ Korea Jeonse Deposit Refinance Fraud Derivatives’Credit Crunch’, dated May 12, 2023. Losses widen due to COVID-19 stimulus package gap between Korea and the US, see March 24, 2020>