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All of this happened in China this week. A thread. 1/10

Record Covid. China's daily case tally hits an all-time high and Beijing reports the first deaths in more than 6 months. Early signs of a relapse back into the strictest Covid Zero measures emerge, with areas of the capital under effective lockdown. 2/10 bloomberg.com/news/articles/…
Foxconn chaos. Workers in iPhone City clash with riot police over promised wages, unsanitary dormitories and food shortages. Conditions were made worse by a closed-loop system adopted under Covid Zero. The plant makes ~80% of the iPhone 14 models. 3/10 bloomberg.com/news/articles/…
Beyond 2023. Bloomberg Intelligence calculates the potential cost of abandoning Covid Zero: 363 million infections, 5.8 million in intensive care and almost 620,000 deaths. China's full reopening may not happen next year. 4/10 bloomberg.com/news/articles/…
Cash strapped. The property crisis is squeezing income for China’s 31 provincial governments, who have little room for spending. They'll need to roll over debt instead, with over 40% of bonds maturing in the next five years - or about $2.1 trillion. 5/10 bloomberg.com/news/articles/…
Banks to the rescue. Recently enlisted to stabilize the property market, China’s mega lenders are starting to deliver. ICBC leads the pack by providing some 655b yuan in credit lines to 12 developers - Evergrande and Sunac excluded. 6/10 bloomberg.com/news/articles/…
Evergrande's overhaul. The developer that started it all plans to present a restructuring proposal as soon as December. One group of creditors recently requested that Evergrande's chairman inject $2 billion of his own money. 7/10 bloomberg.com/news/articles/…
More money. The central bank will ramp up monetary stimulus soon. Liquidity is far from tight though, and freeing up more cash won't solve China's credit demand-side problem. Borrowing in a Covid Zero economy isn't attractive - no matter how cheaply. 8/10 bloomberg.com/news/articles/…
Ant's punishment. Chinese authorities are set to fine Jack Ma's fintech firm more than $1 billion, says Reuters. Ant's IPO was set to be the world's largest ever before Beijing cancelled it at the last minute almost exactly two years ago. 9/10 reuters.com/business/exclu…
Big short. Bill Ackman and Boaz Weinstein say they're short the HKD, a trade Weinstein calls a 200-to-1 smart lottery ticket. Ackman says the 39-year old peg - which leaves Hong Kong both exposed to China's economy and Fed policy - can't last. 10/10 bloomberg.com/news/articles/…
Sofia Horta e Costa
China stocks, rates, fx, credit and macro for @business in Hong Kong. Weekly threads. Alum of @LSEnews @warwickuni. Views / retweets mine. Lisboeta 🇵🇹
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