China Evergrande (3333 HK) $HK2.58

A quick update on the China Evergrande crisis for subscribers who’ve had their interest tweaked over recent weeks:

• The stock has just come out of suspense with no reprieve for shareholders who saw the stock plunge another 12% although arguably it doesn’t make much difference under $HK3.
• The China Banking Regulator is saying it’s a single one off case and contagion will not follow even though Evergrande saw a 97% drop in sales during peak home-buying season questioning the health of the entire property market.
• We think Evergrande is definitely in the too hard basket but if Beijing is saying the crisis is controllable I would take note, they are more than happy to intervene in markets, financial or housing.
• We feel the initial washout in iron ore is almost over although medium-term the picture remains clouded, another leg down and we feel bargain hunters will surface.

Iron ore stocks are getting interesting for a strong bounce which should help the ASX into Christmas but we wouldn’t advocate being married to such exposure.