Thursday, August 05, 2010

China "Bubble" ( Bursting ) Update & Newest Spin "Excluding Tier 1 Cities Everything Is Fine......"

Not only the cracks regarding the Three Gorges Dam are getting more and more obvious on a daily basis...... You can read my earlier takes on China here

Nicht nur der Drei Schluchten Damm zeigt erste Risse...... Mehr von mir zum Thema China gibt es hier

Andy Xie via NC

How many flats in China are sitting empty? The media recently floated a story — denied by power companiesthat 64.5 million urban electricity meters registered zero consumption over a recent, six-month period. That led to a theory that China has enough empty apartments to house 200 million people….

What especially distinguishes China’s property bubble…is an unprecedented amount of living space. This huge stock of empty flats equals the nation’s quantity bubble.

Although the government doesn’t publish vacancy data, I think the vacancy rate for the nation’s private, commercial housing stock is between 25% and 30%. That’s at least double what’s required in a normal market. The gap between what’s needed and what’s available can be viewed as speculative inventory. The value of this inventory held by speculators is probably around 15% of GDP.

It’s being kept on ice, just as copper and other commodities are hoarded in anticipation of rising prices…

Looking at the clip & the TIME photo gallery Ordos, China: A Modern Ghost Town the very high number looks less "hyperbolic"....

Wenn man sich den Clip & die Photoserie von TIME Ordos, China: A Modern Ghost Town ansieht erscheint die extrem hohe Zahl weniger "übertrieben"....



China Tests Said to Check Risk of Cash Crunch Among Developers Bloomberg
China’s stress tests of banks will assess the risk that a possible slump in property prices may strain developers’ finances and cause homebuyers to default, a person with knowledge of the matter said.

The banking regulator told lenders to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively

Banks were also told to stress test loans to industries including steel, cement, construction materials and home appliances that are related to housing, the person said

Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.
I´ll bet that every (big) bank will pass.....;-) I have to repeat myself Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... & that despite almost $60 billion in recent capital increases from the big banks the term "Drop in the bucket" fits perfectly....

Bin mir sicher das keine einzige (wichtige) Bank durchfallen wird.... Verweise hier auf Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... Denke das trotz der fast 60 Mrd $ an Kapitalerhöhungen der Banken in jüngster Zeit die Bezeichnung "Tropfen auf den heissen Stein" dürfte passen....

Cracks in the Chinese bubble? FT Alphaville
....the rule of law remains weak in Chinese property overall — 24 out of 30 developers surveyed said they knew of companies that had illegally taken out bank loans to buy land.
Land ministry finds 1,457 unused plots China Daily via FT Alphaville
China's Ministry of Land and Resources has found 1,457 unused plots of land nationwide and given a list of what companies hold rights to these plots to the China Banking Regulatory Commission, the China Securities Journal reported today, citing a person familiar with the situation.

The banking regulator will use the list to conduct a risk assessment, the Beijing-based newspaper reported. About 80 percent of the unused plots may be repossessed by the government, according to the report.

It looks like the latest spin attempt to keep the "story" intact comes along the line "excluding Tier 1 cities everything is fine "..... Where have i heard this bevore.... ? ;-)....

Sieht ganz so aus als wenn die nächste Sau die durchs Dorf getrieben wird um zumindest den Anschein zu erwecken das noch nicht alles verloren ist die Überschrift trägt "Abseits der Tier 1 Städte ist der Immobilienmarkt noch intakt"....... Wo habe ich das bloß vorher schon einmal gehört.... ? ;-)

Standart Chartered FT Alphaville

while the focus is on Tier 1 cities, there is a good chance that they do not represent the national trend.

There are, after all, hundreds of other cities around China that are busy growing, and in which people might be still busy building and selling apartments.

Sales have fallen in Tier 2 and Tier 3 cities too, but not by as much as in Tier 1 cities, as Chart 2 shows [above]. (In our chart, we have used data from 10 cities: Tianjin, Chongqing, Chengdu, Hefei, Wuhan, Changsha, Dalian, Nanjing, Suzhou and Changchun).

Indeed, in some cities – Hangzhou in Zhejiang province, for instance – we have actually seen prices push up a little since April.

This was a Tier 1 bubble and it looks to have been pricked without killing the Tier 2 and Tier 3 markets

China Real Estate Survey

H/T ZH

At least they acknowledge that Tier 1 is a bubble.....Take a secound look at the volume stat on page 2...... Crashing is defintely not an overstatement....UPDATE:StanChart: Chinese property correction imminent

Immerhin wird richtigerweise der Tier1 Immobilienmarkt als Bubble identifiziert.....Denke die Volumenangabe auf Seite 2 ist besonders "beeindruckend"..... Der Begriff "Crash" ist sicher nicht als übertrieben einzustufen....UPDATE: StanChart: Chinese property correction imminent

UPDATE:

Following the great (stock market) leader — China FT Alphaville

As equity markets should act as a leading indicator of broader economic growth trends, it seems, therefore, that the Chinese equity market has recently become ‘the leading indicator of the leading indicators’. Given that the local Shanghai Composite index and MSCI China have both rebounded by 13-15% from their recent lows and our China strategist, Minggao Shen, has just turned more bullish on the market1, these events are a positive mix for global emerging markets as a whole. This is, therefore, a good time to consider the Chinese market’s role as a signaling mechanism for GEMs as a whole.

China is now a very large economy (the second biggest in the world, accounting for an estimated 9% of global GDP in 2010) and a big stock market (the ninth biggest in the world).

The Chinese economy is also expected to account for as much as 23%10 of global growth (i.e., the rise in global GDP) in 2010, a share that is higher at present due to the weakness of developed economies . . .

China not only now accounts for a significant proportion of global growth in a but it is, by far, the biggest consumer of commodities. Our commodities analyst, Alan Heap11, reports that China currently accounts for the consumption of around 40% of several major metals including copper, nickel, and aluminum . . .

Oh boy.... Wall Street Finest / Shanghai strikes again.... Too bad that he didn´t mention that one reason for the rise in the stock market is probably the stalling real estate market.... With negative real interest rates Chinese have besides GOLD almost no place to put their money to work..... If my view on real estate is correct all his bullish arguments would be turned upside down......

Mal wieder perfektes ( Experten ) Timing..... Wäre nett gewesen wenn zumindest in einem Nebensatz erwähnt worden wäre das einer der Haupttreiber für den Geldfluss in die Aktienmärkte der rapide abkühlenden Immobiliensektor ist....Da die Chinesen mit negativen Realzinsen leben müssen und Abseits von GOLD nur der Aktienmarkt als Alternative übrig bleibt verwundert die gesehene "Stärke" nicht....Sollte ich mit meiner Meinung zum Immobilienmarkt in China auch nur im Ansatz Recht behalten drehen sich die o.a. "bullischen" Argumente über Nacht ins Gegenteil....

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