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Welcome to our blog – a place to discuss and exchange thoughts and ideas about iX-7 Asset Management SA, the stock markets and all matters relating to wealth management.
For quite some time now, we argued that the Chinese property market is due to release corrective action. As of yesterday, China's securities regulator confirmed that it has accused the management of Evergrande of inflating revenues by more than $78B in the two years before its debt default. The inflated figures far exceeded that of Luckin Coffee (auditor Ernst & Young Hua Ming LLP (EY)) and Enron (auditor: Arthur Andersen), and could spell trouble for the underwriters of Evergrande’s bonds that were issued based on these falsified numbers.
As a result, the government imposed the largest penalty in Chinese history: the troubled property developer was fined $581M, while big for local circumstances by international standards it is still low.
While issuing this penalty, there are some wider ramifications - the company’s former auditor PricewaterhouseCoopers, and the reputation of Chinese regulators are seriously damaged for now.
Knowledge is power.
