The South China Mall, White Elephants & Beijing University.......

I have blogged about this mall in April 2007 and even i´m surprised that things have indeed deteriorated further....

Ich habe bereits im April 2007 über besagtes Einkaufszentrum gebloggt und es sieht so aus als wenn sich die Lage seit Eröffnung nicht gerade verbessert hat....



Most "comical " aspect is that, according to Paul Allen from Bloomberg News, the new owner of this "white elephant" is now the Beijing University .... ?!?!? Surprising that even the Bloomberg reporter shrugs this probably most interesting circumstance of.....

Die Frage muß erlaubt sein warum ausgerechnet die Universität in Peking jetzt Eigentümer ( lt. Paul Allen von Bloomberg News ) geworden ist..... ?!?!? Mindestens genauso überraschend ist, wie fast selbstverständlich der Bloomberg Reporter die wohl mit Abstand interessanteste Tatsache erwähnt, das Universitäten zumindest zum Teil massiv in Immobilien "machen".......

It seems the spin regarding the housing market ( see China "Bubble" ( Bursting ) Update & Newest Spin "Excluding Tier 1 Cities Everything Is Fine......" ) cannot be asserted when it comes to malls.... ;-)

Es sieht damit ganz so aus als wenn die fast verzweifelt klingende Aussage das Abseits der großen Metropolen der Wohnimmobilienmarkt noch "günstig" ist ( siehe China "Bubble" ( Bursting ) Update & Newest Spin "Excluding Tier 1 Cities Everything Is Fine......" ) für Einkausfzentren nicht behauptet werden kann...;-)

But one has to admit that th South China Mall is somewhat "special" and won´t win any awards for their "superb" market research....

Man muß fairerweise zugestehen das die South China Mall wohl keine Preise für besonders gute Marktforschung und Planung gewinnen wird.....

Over the last few years, hundreds of malls have popped up around China, which now claims seven of the world's 20 largest. Two of those, Oriental Plaza in Foshan and Grandview Mall in Guangzhou, are within 50 miles of South China Mall.

It will be fun to see if the ghost town par excellence ORDOS ( see Central Planning & Ghost Towns In China..... & Ordos, China: A Modern Ghost Town ) will face a similar destiny....

Es wird interessant zu sehen sein wie sich die Geisterstadt schlechthin ORDOS ( siehe Central Planning & Ghost Towns In China..... & Ordos, China: A Modern Ghost Town ) in den nächsten Jahren entwickelt.....

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 companies — that 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....

China To Open Gold Market, Improve Tax Policies, PBOC Says

Keep in mind that just until a few years ago China had banned the private ownership of GOLD as an investment product.... Watch the clip & i assume the PBoC had to do something to keep the market operating in an orderly fashion....According to the Financial Times Deutschland GOLD in HK is trading already with very large premiums vs the London price....Another main reason could be to establish a stronger "alternative" to the quasi monopolists London & NY....Every bit of new competition for the London & NY exchanges is "appreciated"....

Vor dem Hintergrund das China bis vor einigen Jahren jeglichen privaten Besitz von GOLD im Zusammenhang mit Investments verboten hatte erscheint die Meldung in einem noch vorteilhafteren Licht.... Ich tippe mal, das wenn man sich den nachfolgenden Clip ansieht, die PBoC zumindest teilweise "Getriebener" der Entwicklung ist. Ohne eine weitere Liberalisierung könnte es leicht passieren das ein halbwegs geordneten Markt nicht mehr zu gewährleisten ist.....Wenn man der Financial Times Deutschland Glauben schenken darf wird GOLD in HK bereits jetzt mit einem mehr als happigen Aufschlag vs dem Londoner Kurs gehandelt....Ein weiteres wichtiges Argument dürfte sein eine schlagkräftige Handelsplatzalternative zu installieren....In jedem Fall ist jede zusätzliche Konkurrenz für die Börsen in London & NY mehr als willkommen.....



China to Open Gold Market, Improve Tax Policies, PBOC Says

Aug. 3 (Bloomberg) -- China will continue to open up its gold market and will study how to improve taxation policies for the use of gold for investment purposes, the People’s Bank of China said today.

China will improve foreign-exchange policies related to the gold markets and will allow more commercial banks to export and import the metal, the central bank said in a statement on its website.

The government is also studying allowing foreign suppliers to deliver bullion directly to the Shanghai Gold Exchange, it said.

The total volume of gold traded on the Shanghai Gold Exchange jumped 59 percent in the first six months from a year earlier to the equivalent of 3,174.5 metric tons (102.1 million troy ounces), Song Yuqin, vice general manager at the exchange, said last month.

The Shanghai Gold Exchange has five foreign bank members including the China units of HSBC Holdings Plc and Standard Chartered Plc, according to a statement on the bourse’s website.

Gold demand in China, the world’s second-largest consumer, increased in the first half as government measures to cool the property market and falling equities spurred investment, the exchange said July 7. Spot gold climbed to a record in June as investors sought to protect their wealth amid concerns about the global economic recovery.

“The Chinese central bank is liberalizing the gold market step by step and this is the latest move,” said Ellison Chu, managing director at the precious-metals desk at Standard Bank Asia Ltd. in Hong Kong. “It will allow more foreign participation in China’s growing gold market and it will also help China to be more integrated into the global gold-trading system.”

The central bank also said it would encourage and guide commercial banks to provide yuan-denominated gold derivative trading.

The following presentation monitoring the entire GOLD picture in China is taken from an earlier post In Fiat Money We Do Not Trust "Chinese Edition"

Die nachfolgende Präsentation die umfassend das Thema China & GOLD abhandelt stammt von einem früheren Posting In Fiat Money We Do Not Trust "Chinese Edition"
Gold Report China

More Proof That China´s Real Estate Market Is Fueled Mainly Via State & Local Owned Enterprises.....

To get the entire picture you should read China : State & Local Owned Enterprises vs Madoff, Ponzi, Enron...... first..... Just last week i labeled the headline as a little bit "provocative"..... As usual i was too polite... ;-)

Empfehle zur Einführung und um das ganze Ausmaß zu erfassen vorweg China : State & Local Owned Enterprises vs Madoff, Ponzi, Enron...... zu lesen..... Letzte Woche habe ich die Überschrift bewusst noch als eine leichte Übertreibung tituliert.... War wie üblich mal wieder zu höflich.... ;-)

State-Owned Groups Fuel China’s Real Estate Boom NYT

WUHU, China — The Anhui Salt Industry Corporation is a state-owned company that has 11,000 employees, access to government salt mines and a Communist Party boss.

Now it has swaggered into a new line of business: real estate.

The company is developing a complex of luxury high-rises here called Platinum Bay on a parcel it acquired last year by outbidding two other developers to win a local government land auction.

Anhui Salt is hardly alone among big state-owned companies. The China Railway Group is developing residential complexes in Beijing after winning the auction for a huge piece of land there.

Likewise, the China Ordnance Group, a state-led military manufacturer best known for amphibious assault weapons, paid $260 million for Beijing property where it plans to build luxury residences and retail outlets.

And in one of China’s biggest land deals yet, the state-run shipbuilder Sino Ocean paid $1.3 billion last December and March to buy two giant tracts from Beijing’s municipal government to develop residential communities.

All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.

By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government’s effort to keep China’s real estate boom from becoming a debt-driven speculative bubble — like the one that devastated Western financial markets when it burst two years ago.

Here in Wuhu, a sleepy industrial town about 70 miles west of Nanjing, Anhui Salt is breaking ground on its high-rise project in the center of town — next to a hotel operated by Anhui Conch Holdings.

The land was put up for auction in May 2009, and there were just three bidders — another of which was also a state-owned company. Anhui Salt, which also boasts of operating a steel trading arm, a financing vehicle and even two Honda dealerships, says it is eager to expand beyond industrial products and table salt.

“Platinum Bay is Anhui Salt Industry’s first luxury project and targets the very rich, the very elite class of Wuhu,” said Su Chuanbo, marketing manager.

Asked why Anhui Salt wants to be a developer, Mr. Su said the central government had encouraged state companies to be more profitable, and that real estate was incredibly lucrative.

Add the following story to the mix ........

Das kombiniert mit der nachfolgenden Meldung......

Chinese Manufacturing Weakens in ‘Slowdown, Not a Meltdown’ Bloomberg

China’s July manufacturing data were the weakest in more than a year as the government clamped down on property speculation and investment in polluting and energy- intensive factories.

A purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics showed a contraction. A government-backed PMI slid to 51.2 from 52.1, the Federation of Logistics and Purchasing said yesterday.

The HSBC PMI slid to 49.4, the first reading below 50 in 16 months, from 50.4 in June. Measures of output, orders and export orders all showed contractions. The government PMI, released by the statistics bureau and the logistics federation, showed the weakest expansion in 17 months.

H/T Chart BI

Needless to say that stocks in tandem with commodities surged to a multi month high.....;-)

Überflüssig zu erwähnen das die Aktienmärkte Hand in Hand mit den Rohstoffen diese Nummer mit neuen Mehrmonatshochs abgefeiert haben.... ;-)

HSBC's July China services PMI points to expansion MW

China's service-sector growth accelerated in July, marking the fastest pace of expansion in three months, according to HSBC's Purchasing Managers' Index. The PMI came in at 56.3 in July, up from 55.6 in June, HSBC said in an emailed statement Wednesday. "This improvement in the July service PMI reading, though modest, reflects the resilience of the domestic part of the economy, in particular consumer-related sectors. Combined with the sustained recovery in the labor market, this should cushion the economic slowdown in the coming quarters," The July PMI marks the 20th consecutive month of expansion for the services sector

This "transition" is good in the long term..... Rebalancing is needed....

Immerhin ein Silberstreif am Horizont.... Die Entwicklung des Servicesektors ist dringend notwending um die Ungleichgewichte zumindest auf Lange Sicht halbwegs ins Lot zu bringen....

China : State & Local Owned Enterprises vs Madoff, Ponzi, Enron......

The headline is for sure a little bit "provocative" but at least in part some similarities are difficult to deny.... A nice follow up to Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... Looking more & more like an injuste to Kyrgyzstan & Co.....;-)

Die Überschrift ist sicher ne leichte Übertreibung..... Trotz allem kommt man schwer darum herum zumindest in Teilbereichen gewisse Gemeinsamkeiten zu entdecken.....Nette Ergänzung zu Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... Inzwischen fast als Beleidigung Islands zu bezeichnen.... ;-)


Just how risky are China’s housing markets? VoxEU

We collected data on all the residential land parcel auctions in Beijing dating back to Q1 2003, and created a constant quality price index for Beijing residential land, controlling for a number of location and site quality variables that are described in Wu et al. (2010).

Figure 5 shows that real, constant quality land values increased by over 750% since 2003 in the Chinese capital, with more than half of that rise occurring over the past two years. Additional regression analysis showed that state-owned enterprises controlled by the central government played a meaningful role in this increase, as prices were 27% higher on the parcels they won at auction compared to otherwise equivalent land sites purchased by other investors.

The role of state-owned enterprises also is potentially worrisome. It could be that these entities are superior investors and are purchasing sites that are of especially high quality in ways that we cannot control for in our empirical analysis. However, it also could be that moral hazard is at work here, as these entities are thought to have access to low cost capital from state-owned banks and may believe they are too big to fail. If this is the driving force, then prices are being bid up as one arm of the government buys from another.

More on the same topic.....

Mehr zum gleichen Thema.....

Meanwhile, in the Chinese property market… FT Alphaville

And once you’ve picked your eyeballs off the floor after seeing that 800 per cent figure, do note the interesting finding about the SOEs.

In particular, the paper says that a ‘meaningful fraction’ of the rise in prices was driven by the few but huge companies backed by central government — ‘central SOEs’. And central SOEs are getting more influential in the market — see chart:

And as the paper continues, by way of explanation:

…Central SOE developers pay high prices relative to the values of nearby housing unit sales prices. That suggests these particular buyers simply pay more and that this does not merely reflect omitted quality effects. Moral hazard arising from these entities believing they are too important to fail, combined with their access to low cost capital from state-owned banks, also could help explain their bidding behavior… It remains an open question as to why central SOE developers became so much more active in housing development over the past few years.

Here Comes The Real Stress: Only 27% Of China Project Loans To Be Repaid In Full ZH

Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects, according to a person with knowledge of data collected by the nation’s regulator

Local governments set up the financing vehicles to fund projects such as highways and airports due to limits on their ability to directly borrow money. The central government this year restricted borrowing on concern money isn’t being used for viable projects.

Only 27 percent of the loans to the financing vehicles can be repaid in full by cash generated by the projects they funded, the person said

Chinese rating agency criticises … Chinese rating agencies FT Alphaville

July 27 (Bloomberg) — Credit ratings assigned to yuan- denominated bonds issued on behalf of local governments in China are misleading and don’t reflect risks investors face, Dagong Global Credit Rating Co.’s chairman said.

Local government-backed borrowers shop around for the best rankings from Chinese ratings companies and “whoever gives them a better rating gets the business,” Guan Jianzhong, chairman of privately owned Dagong, one of China’s five official ratings agencies, said in a Bloomberg Television interview in Beijing yesterday. “This is very dangerous.”

Needless to say that every large bank has China Inc. as a majority owner.....

Denke man muß nicht extra erwähnen das zudem jeder der großen Banken unter Mehrheitskontrolle des chinesischen Staates steht.....

The PBoC can’t easily raise interest rates M. Pettis / China Financial Markets

One of the problems with a severely repressed financial system, especially one with rapid credit expansion, is that there tends to be a huge amount of capital misallocation supported by borrowing, and in an increasing number of cases it is only the artificially-reduced borrowing costs that allow these investments to remain viable. I worry that even if the PBoC wanted to raise rates, it would not be able to do so without exposing how dependent borrowers are on artificially cheap capital.

Take the most obvious example, the PBoC itself. The central bank officially has about $2.5 trillion in reserves. The PBoC has funded this position with an equivalent amount of RMB liabilities, which makes it very vulnerable to changes in the value of the currency.

Weirdly enough, although the numbers are huge, it has proven difficult to convince anyone that the PBoC is not the richest institution in the world, and that it is actually very vulnerable to big losses

The problem for the PBoC occurs not just because of the currency mismatch but also because it needs repressed funding costs to keep it profitable. How much do the PBoC foreign currency assets earn? I would guess probably between 3% and 4%, maybe less. The RMB funding cost, on the other hand, is roughly between 1.5% and 2.5%. This leaves the PBoC with a net positive carry of between 1% and 2%.

If the RMB appreciates by as little as 2% a year, in other words, the PBoC runs a negative carry on its assets. Every further 1% increase in interest rates, or additional 1% rise in the value of the RMB, then, erodes its capital by at least $25 billion (annually, if it happens through an increase in interest rates).

Many years of very low cost borrowing has created a huge dependency on low interest rates among SOEs, local governments, and other creditors of the bond markets and the banks (not to mention the banks themselves), all of whom are directly or indirectly funded by long-suffering households.

As I discussed in an entry several weeks ago, repressing the interest rate is the equivalent of granting hidden debt forgiveness

Moral Hazard everywhere.....

Moral Hazard wohin das Auge blickt......

UPDATE:

ICBC May Raise $6.6 Billion, Adding to China Bank Share Sales

ICBC’s offer brings to more than $60 billion the amount China’s five largest banks are raising after a record $1.4 trillion in lending last year put pressure on capital levels.

Bank of China Ltd. has also said it plans a CNY60 billion rights issue in Shanghai and Hong Kong and China Construction Bank Corp. is planning a CNY75 billion rights issue in both markets

I assume the term "Drop in the bucket" fits perfectly....

Denke die Bezeichnung "Tropfen auf den heissen Stein" dürfte passen....

Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan.....

A follow up on Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... & "Enron-Esque Characteristics" Hiding An Even More Explosive Credit Growth In China .....

Als Nachschlag zu Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... & "Enron-Esque Characteristics" Hiding An Even More Explosive Credit Growth In China ......

Moody's average rating for their financial strength is D-. On that scale, only six countries are worse off, including Iceland and Kyrgyzstan.

Fitch goes aaaagh on Chinese securitisation FT Alphaville

Frightened with Fitch on Wednesday. The rating agency has looked at where Chinese lending is disappearing to — only to reiterate that rather too much is flowing into the black hole of informal securitisation.

A very black hole, as Fitch explains (our emphasis):

Fitch believes the vast majority of these transactions are not publicly disclosed by Chinese banks, and few, if any, traces of the loans remain in financial statements. The growing popularity of this activity is increasingly distorting credit growth figures at an institutional and system level, resulting in pervasive understatement of credit growth and credit exposure. Consequently, Chinese banks’ loan loss reserves and capital are more exposed to credit losses than current data suggests.

Adjusted for informal securitisation activity, Fitch estimates that the net amount of new CNY loans extended in H110 was closer to CNY5.9trn, or 28% above the official figure of CNY4.6trn. While this difference may seem small when compared to the total stock of CNY loans for banks involved in this activity (roughly CNY34trn at end-June 2010), on a flow basis the volume of credit being shifted off balance sheets in recent times has been large and rising. Activity also is largely concentrated among just a few dozen banks, and institution-specific exposure is often much higher.

Some banks very actively engaged in transactions last year are showing up in 2010 data as minimally involved, yet the bank’s own salespeople (responding to Fitch’s enquiries) state that business remains as strong as ever. Meanwhile, private placements of products to institutional investors are becoming more commonplace, most of which are never disclosed to any entity but the CBRC.

Because of this worsening in disclosure, data from third-party providers is capturing less and less transaction flow, with as much as 40% of deals in H110 going uncaptured, versus less than 10% prior to end-2009.

Although broadly similar, informal securitisation in China differs considerably from traditional securitisations in some critical aspects: asset pools are usually very heavily concentrated; the lack of a secondary market means investors typically must hold positions until maturity; there is no tranching based on credit risk; and the roles of loan originator, product distributor, custodian, and loan manager are frequently commingled, and in practice sometimes all played by a single bank.

Fitch on Chinese Banks; 7/2010

H/T Zero Hedge

China’s trust factor FT Alphaville

First, cash-rich depositors were frustrated with low [bank] deposit rates (around 2% for a one-year deposit), and trust companies were happy to offer 4% or thereabouts, principal guaranteed.

Keep in mind that even the reported CPI is running close to 3 percent......With this kind of "alternatives" in search for yield and a housing bubble already in place ( see Andie Xie: "China's Property Market Is One Of The Biggest Bubbles Ever..." it is no wonder that In Fiat Money We Do Not Trust "Chinese Edition" is getting more "popular"......

Wenn man jetzt noch bedenkt das selbst die offiziellen Daten eine CPI von 3% ausweist und man berücksichtigt das der Immobilienmarkt bereits bis zum Bersten aufgepumpt ist ( siehe Andie Xie: "China's Property Market Is One Of The Biggest Bubbles Ever..." kann es wenig verwundern das die Fraktion In Fiat Money We Do Not Trust "Chinese Edition" deutlich an Popularität gewinnt.....

Second, even though banks’ commissions on these products are low, they did not want their clients going to other banks, so they marketed them enthusiastically. Third, in some cases the banks were able to sell their own loan assets on to the trust company, which repackaged them and then sold them as wealth management products back to the bank’s own clients. This allowed the banks to manage their official outstanding net loan position, which was subject to the loan quota.

Trust loans. These are loans extended by the trust company to one or more borrowers, which are then repackaged and sold on. We understand that quite a few real estate firms have borrowed from trusts at 15-20% annualised interest rates, given the banks’ inability (since late last year) to increase their exposure to this sector. A bank that is unable to lend to a client itself may find a trust company that is willing to lend, and then sell the asset through its own branches . .

The point is, these are sizable positions. StanChart thinks the total amount of lending done by trusts and the total value of repackaged bank loan products issued in the first five months of this year was RMB690bn ($100bn). For context, that’s about a month’s worth of Chinese bank lending.

(Other estimates are even higher. The Economic Observer has RMB2,000bn in the first half of 2010, while the Shanghai Benefit Investment Consulting thinks they were at RMB2,5000bn).

The issue then, is that even as China attempts to curb bank loans — sometimes by literally pulling the plug on them — these trusts have stepped in to fill some of the space left behind.

Small wonder then, that the CBRC is so keen to crack down on the industry to make its lending restrictions effective

.

Red Light Flashes for a Bank Lending LoopholeCaixing Online

Despite the late 2009 orders from CBRC, "trust loans from bank-trust cooperation grew significantly in April and May," a commission official said. "Especially in May, the growth began surging. We often received text messages from banks marketing this type of wealth management product."

On June 1, CBRC convened an urgent meeting with the 12 largest of the nation's approximately 60 trust companies, asking that they slow bank cooperation. They asked that bank-trust cooperation at the end of June not exceed the level of deals posted on April 30.

Statistics from the Yanglee Trust Workshop said 504 bank-trust wealth management products were issued in June – an average 20 products per bank per day – valued at about 777 billion yuan, up 30 percent from May.

The CBRC obviously has a minor credibility issue..... ;-)

Sieht ganz so aus als wenn der Regulierer CBRC nicht ganz für voll genommen wird... ;-)

In Fiat Money We Do Not Trust "Chinese Edition"

Perfect follow up on In Fiat Money We Do Not Trust ... I think it´s safe to assume that China will be a net buyer of GOLD for some time to come......Especially when you consider the tiny FX to GOLD Reserves Ratio from the Central Bank......

Paßt hervorragend zu In Fiat Money We Do Not Trust .... Denke man kann ohne Übertreibung sagen das China bzw die Chinesen auf Sicht der nächsten Jahre sicher zu den Nettokäufern von GOLD gehören werden.....Gilt besonders wenn man sich das aktuelle Verhältnis der Fremdwährungen zu GOLD der Chinesischen Notenbank ansieht.....



H/T The Mess That Greenspan Made

I just wanted to add that it was illegal to buy GOLD as an investment vehicle in China for decades and with negative real interest rates & very few alternatives this kind of "GOLD FEVER" is probably less surprising...Since Greece has made headlines here in Germany the same store would have been almost as packed in Hamburg or Munich ;-)

Looks like Sorros knows this chart and wants to frontrun the "ultimate bubble".... Otherwise the 100% increase of his GOLD investment would make little sense.......

Ergänzend sollte man wissen das es in China bis vor kurzem verboten gewesen ist GOLD für Investmentzwecke zu erwerben und das es dank der seit Jahren notorisch negativen realen Guthabenzinsen & fehlender Alternativen nicht weiter verwunderlich ist das solche Läden so prosperieren....Seit Griechenland in Deutschland die Schlagzeilen beherrscht bin ich mir sicher das ein identischer Laden in Hamburg oder München ähnlich erfolgreich wäre.. ;-)

Sieht ganz so aus als wenn Sorros diesen Chart in Verbindung mit dem "ultimativen Bubble" vor Augen hat... Ansonsten würde es wenig Sinn machen das er sein GOLD Investment inzwischen verdoppelt hat.......

Gold Report China H/T ZH

The following chart won´t hurt their appetite for GOLD either......

Der nachfolgende Chart dürfte den Appetit in Sachen GOLD nicht gerade mindern.....

RBS on central banks’ underwater EUR positions FT Alphaville

Because over half the reserve accumulation in this period took place in the last 3 years, Chinese acquisition of reserves has been at relatively high EUR/USD levels. There is no data in the public domain on how much of China’s purchases were in EUR, but presumably diversification to lower the share of USD holdings may have pushed EUR purchases to close to half of all acquired reserves, and a majority of these purchases are well ‘out the money’.

The chart above shows that as much as 77% of Chinese reserves were accumulated at levels above EUR/USD 1.25. This does not discriminate between EUR purchases and USD purchases.

Andie Xie: "China's Property Market Is One Of The Biggest Bubbles Ever..."

We really live in very interesting times.....The update comes just in time for todays headline Property prices in China grew at the fastest pace in nearly five years in March.... The "Wall Of Worry" is getting steeper on a daily basis.... For more on the "China Syndrome" see here, here, here , here & here.....

Aufregende Zeiten.......Passend hierzu die heutige Nachricht Property prices in China grew at the fastest pace in nearly five years in March nicht passen....Eine ausführlichere Betrachtung des immer ernster werdenden "China Syndrome" gibt es hier, hier, hier , hier & hier.....

Empty : Though many of the properties in Kangbashi have been sold and a million people were projected to be living in Kangbashi by 2010, the city is still empty.

Ordos,China: A Modern Ghost Town Photo Gallery TIME

H/T The Mess That Greenspan Made

No Room To Relax Andy Xie / China International Business

The central government has unleashed another round of property tightening measures. This time it is focusing on mortgage lending terms: the mortgage interest discount for first-time homebuyers has been reduced; the discount for second-time homebuyers has been abolished and the down payment requirement raised to 40%; and the rate for third-time buyers is being left to the banks' discretion with down payments raised to 60%.

Predictably, sales volumes in both primary and secondary markets have collapsed. But no one is panicking, not even those who live off the property bubble. Why? Aren't they supposed to be terrified of the government's crackdown?

It seems we have seen this movie before. China has launched property-tightening measures several times but it relaxed them just when they began to bite.

The bottom line is that local governments, and the central government through them, depend very much on property for revenue. The market doesn't believe the government will cut off the hand that feeds it.

Local governments and developers are sitting on massive liquidity that they raised last year through land and property sales and borrowings, taking advantage of the "anything goes" window during the stimulus period. They seem to believe that the central government will change its mind before they run out of liquidity. So they are comfortable waiting and not cutting prices.

Cutting prices doesn't make sense if the government is expected to loosen policy again soon. The current lending terms effectively keep second- and third-time homebuyers out of the market. To sell, developers must cut prices to levels affordable to the buyers of first homes, who have low incomes and little wealth. All the players will play by the new rules only if the central government proves its credibility by maintaining the tightening policy until local governments and developers run out of money.

Contrary to the policies' intent, local governments are readying for another round of property inflation. Local governments have been using bank loans to resettle residents, and resettlement costs have skyrocketed since those being moved need enough compensation to buy properties at today's prices. Unless property prices rise considerably, local governments will end up losing money, which they cannot afford to do.

Resettlements played an important role in supporting demand for property last year. The overwhelming majority of end-user purchases probably came from resettled residents who used their compensation money for a down payment.

Resettlement compensation is the biggest transfer of wealth from the government to the household sector since the privatization of public housing at low prices a decade ago. It is probably the most important government action supporting today's economy.

The positive elements of resettlement compensation come with two major negatives. First, it is using a form of leverage to support demand. Local governments borrow to pay the compensation packages, using the land as collateral. The resettled residents use the compensation as down payment for mortgage borrowing; so government debt becomes equity for mortgage debt.

There is no real equity in the financing chain

China's property market is a massive bubble. The stock of residential properties, developers' inventories, and land that local governments have pledged to banks may exceed by three times the gross domestic product.

Get the yuan right, and prove pundits wrong Andy Xie / Caixin

Yuan appreciation hype ignores China's need for higher rates

The intensity and persistence of yuan appreciation expectations point to support for China's vast property bubble. These expectations have increased the concentration of hot money in China, which in turn has caused excess liquidity and speculation, fueling the property bubble.

By all measures (stock value to gross domestic product ratios, inventory value to GDP ratios, new property sales to GDP ratios, price to income ratios, rental yields and vacancy rates), China's property market is one of the biggest bubbles ever. It's probably much bigger than the U.S. property bubble relative to GDP.

Now, the same liquidity that fueled the property bubble is leading to a rapid pickup for consumer price inflation. One just needs to look around to see the seriousness of the inflation picture, regardless of how it's measured. Denying that inflation is serious in China right now is akin to burying one's head in the sand. This sort of denial is how countries in Southeast Asia got into a crisis situation in the past: They kept real interest rates too low and fueled speculation that eventually destroyed their banking systems.

If China's economic stimulus is withdrawn, the property bubble will cool. And it may even burst. This is why so many interest groups consistently argue against higher interest rates. Instead, they support using currency appreciation to cool inflation.

Many analysts argue that raising interest rates would attract more hot money. This is wrong. Hot money comes to China for currency appreciation and asset-bubble reasons, not to chase interest rates. When an interest rate is raised, expectations for property-price appreciation wane and hot money is more likely to fall than rise.

Increasing the yuan's value a bit would certainly trigger more frenzy. Any new property booms that follow may support the economy for a time. But the long-term consequences would be severe. Indeed, a small appreciation could make a crisis inevitable.

UPDATE:

Top ten reasons you know China has a financial bubble on its hands Ed Harrison

Jim Chanos On Charlie Rose - Full Interview ZH

China’s Debt Bubble: When Will the Ponzi Unravel? NC

Chinese consumer credit binge begins FT Alphaville

China - The Mother of All Black Swans ZH

Red hot real estate Economist Free Excahnge

China Bond Risk May Offset Reward WSJ

Real Estate "Froth" In Hong Kong & China

"Reassuring" that i havn´t read of any new Ghost Towns (at least for today.......UPDATE: I was WRONG....;-) For more on the "China Syndrome" see here, here , here & here.....

Immerhin ( zumindest heute....UPDATE: Zu früh gefreut... ) keine Meldungen über neue Ghost Towns .... ;-) Mehr zum immer ernster werdenden "China Syndrome" gibt es hier, hier , hier & hier.....



Sun Hung Kai sales yield $541 mln over weekend MW

Sun Hung Kai Properties Ltd. (0016.HK) said Monday it sold 900 flats over the weekend at Yoho Midtown, a residential project in New Territories West, for HK$4.2 billion (US$541 million).

The company sold the units at the project in Yuen Long for an average of HK$5,400 per square foot, project director Amy Teo said.

About 40 units were immediately advertised for sale on the secondary market at a premium of up to 20%, the South China Morning Post newspaper reported Monday, citing property agents.

Yoho Midtown is Hong Kong's biggest housing project to go on sale so far this year. It has eight towers containing 1,890 units ranging in size from 400 to 1,400 square feet

China's building bubble about to burst The Star

Frenzied developers with access to cheap money are creating a glut of premium office space and luxury apartments, priced at about 80 times the average income of the city's residents.

Prospective middle-class homeowners, in panic-buying mode, are snapping up two properties at once, hoping to flip the second one to finance the first. Civic officials are encouraging the building boom.

The sale of vacant lots bolster their municipal coffers

The disturbing phenomenon extends beyond Beijing, where housing prices are far higher than in Dubai's overbuilt property market before that red-hot Persian Gulf economy imploded last year. In December alone, Chinese housing prices rose almost 8 per cent in 70 major Chinese cities, while housing starts leapt by 34 per cent nationwide.

China New Village Makes Chanos See Dubai 1,000 Times Bloomberg

The township of Huaxi in the Yangtze River Delta is a proud symbol of how Chinese communists embraced capitalism to lift 300 million people out of poverty during the past three decades.

Its leaders took a farm community with bamboo huts and ox carts in the 1970s and transformed it into an industrial and commercial powerhouse where today many of its 30,000 residents live in mansions and most have a car. Per-capita income of 80,000 yuan ($11,700) -- almost four times the national average -- allows Huaxi to claim it’s China’s richest village.

Huaxi is also emblematic of the country’s construction and real estate boom. Communist Party officials there are building one of the world’s 30 tallest buildings, a 2.5 billion yuan, 328-meter (1,076-foot) tower(Photo Tower ). The revolving restaurant atop the so-called New Village in the Sky offers sweeping views of paddy fields, fish ponds and orchards, Bloomberg Markets reports in its April issue.

Huaxi has an even more ambitious project coming up: a 6 billion yuan, 538-meter skyscraper that would today rank as the world’s second tallest. The only loftier building is the new Burj Khalifa in Dubai.

If the local government in Huaxi really start the "Babel Project" even the biggest "fan" must admit that Beijing has lost control over the provinces....

Sollte der "Tumbau zu Babel" von der lokalen Regierung tatsächlich vorangetrieben werden muß wohl auch der letzte "Bewunderer" eingestehen das Peking schon längere Zeit die Kontrolle über die Provinzfürsten verloren hat.....

UPDATE:

China regulators halt credit to local-government funds MW

China's banking regulator has ordered lenders to stop granting loans to investment vehicles backed by local governments, the latest move to tighten credit standards amid mounting concerns of bad loans down the road, according to a state-media report Wednesday.

Banks have also been ordered to review existing loans used to finance projects backed by local governments, the report said.

Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan.....

I must admit that even as a long time sceptic ( see here , here & here for some recent extreme examples of "creative accounting" & "froth") i´m surprised that the ratings are that ugly....... At least the rating are rewarded with the highest price to book ratio......

Ich muß gestehen das selbst ich als alteingesessener Skeptiker ( siehe hier, hier & hier für die letzten Auswüche an "kreativer Bankenbilanzierung" & "leichten Übertreibungen" ) doch überrascht bin das die Ratings so desaströs ausfallen.....Paßt hervorragend in die Zeit das genau diese Institute weltweit die mit Abstand höchsten Bewertungen erzielen......

Fitch Scratches an Itch WSJ

That's one interpretation of Fitch Ratings' decision to downgrade China Merchants Bank and China Citic Bank. Fitch is worried about the strain that a lending splurge last year is putting on their capital positions, even though CMB, for one, is in the process of raising $3.2 billion via a rights issue.

In truth the downgrades are more of a catch-up exercise for Fitch, placing CMB and Citic on the same footing as most Chinese banks. Eleven of the 16 Chinese banks to which it gives an individual rating are now ranked "D'; the others are rated below that.

And Fitch has for some time come across as bearish on the sector. Its analysts have raised concerns about practices like the repackaging of loans into wealth management products, and the way Chinese banks classify loans.

But it's not alone in showing what might seem a surprising caution about the Chinese banks' prospects. Moody's average rating for their financial strength is D-. On that scale, onlysix countries are worse off, including Iceland and Kyrgyzstan.

The concern all the agencies share is whether recent improvements in the way Chinese banks are run have been enough to match the huge increase in risk on their balance sheets as a result of last year's lending boom. None are expecting immediate answers: dire warnings of a large rise in non-performing loans at Chinese banks are based on the assumption that the music will stop, and their vulnerabilities will be revealed all at once.

In reality, the process could take some time: true recognition of nonperforming loans will likely be delayed by tactics such as rollovers or extra lending to pay off loans gone bad, the sort of practices Fitch has often highlighted.

Fitch

D: A bank that has weaknesses of internal and/or external origin.

There are concerns regarding its profitability and balance sheet integrity, franchise, management, operating environment or prospects. Banks in emerging markets are necessarily faced with a greater number of potential deficiencies of external origin.

To be sarcastic i would argue that this definition is probably true for most banks worldwide.. ;-) No wonder the regulators are a bit nervous.... It wouldn´t surprise me if we will see some monster ( i don´t mean a few billions here & there ) captital increases in the not so distant future....... Probably in large part funded via several goverment controlled entities.... I repeat myself but if you want to get the best insight on China the blog from Michael Pettis is a must read!

Böse formuliert würde ich behaupten das die Definition von Fitch auf die meisten Banken weltweit zutrifft... ;-) Kein Wunder das die Offiziellen doch leicht nervös werden..... Ich denke es stehen uns in China demnächst einige Monsterkapitalerhöhungen ins Haus.... Rede da nicht von einstelligen Mrdbeträgen...... Würde mich wundern wenn das zum großen Teil aus privaten Mitteln finanziert wird...Wer einen erstklassigen und vor allem zeitnahen Blick auf das Geschehen in China haben möchte für den sollte China Financial Markets von Michael Pettis Pflichtlektüre sein....

Update:

Nonperforming Loans in China Rise to "Trillions of Renminbi Mish

China's financial system / Red mist Economist

Perhaps the only Western equivalents of a Chinese bank are the two American housing agencies, Fannie Mae and Freddie Mac—vast institutions with political mandates to expand credit, and protection from the consequences of their role in fostering bad debt.

China’s metropoli bubble fear FT Alphaville

We believe that we now have a bubble in many cities, particularly the big ones

Visualizing "Froth" In China.......

Fits perfectly to the last post on the "China Syndrome".....

Paßt hervorragend zum letzten Post in Sachen "China Syndrome"...

H/T The Mess That Greenspan Made



In this context it really will be interesting how much of the recent credit bonanza will go bad... Here is one rough estimate....

Nachdem man den Clip gesehen hat dürfte klar sein das ein nicht unwesentlicher Teil der letzten Kreditexoplosion eher früher als später in die Kategorie "problematisch" fallen dürfte.... Hier kommt eine grobe Einschätzung....

WSJ

But 2009's lending has surely stored up some problems for China's banks. If, say, 20%of 2009's new loans go bad, and 10% of likely new loans in 2010 also run into trouble, total nonperforming loans would reach $381 billion, or 8% of China's 2009 GDP, UBS economist Tao Wang calculates. Nor has China ever truly resolved the bad debts it shifted off banks' balance sheets a decade ago.

Chanos: China Bubble Ready to Burst


With China the main driver of global markets it´s no wonder why i´m "sceptical" when it comes to China, the sustainability of the recent recovery & risk / reward ratios in almost any asset class.... ?

Thanks to the "Volcker Rule" Wall Street Finest can spin any correction of this overvalued / priced for perfection & overbought market on Washington / Obama.... In reality this is only the catalyst aka excuse to sell ( based in part on the "shocking" conclusion that the times for easy bailouts are finally over! > "Power To The People" ) ..... Can´t blame them ( except WSJ see bottom of the post ) ...... At least there is now a good chance that some of the "froth" & "complacency" will be "fleeing" the market.... ;-)

Wenn man jetzt in Betracht zieht das China den bisherigen Aufschwung an den Märkten zu einem ganz gewichtigen Teil geschultert hat verwundert es nicht das ich seit geraumer Zeit eine "skeptische" Sichtweise im Hinblick auf China, Nachhaltigkeit des Aufschwungs & Chance / Risikoverhältnis habe.... ?

Immerhin haben so die Strategen der Wall Street dank der "Volcker Rule" jetzt einen Anlaß gefunden diesen bereits seit einiger Zeit anfälligen ( weil bis zur Perfektion gepreist, überkauft & extrem bullishen Sentiment) Markt abzuverkaufen und den "Schwarzen Peter" Washington / Obama ( und der schockiernden Erkenntnis das die Zeiten der bedenkenlosen Bailouts vorbei sind > "Power To The People" ) zuzuschieben.....Kein Vorwurf ( mit Ausnahme des WSJ, siehe Ende des Postings ) ...... Immerhin dürften damit die Zeiten der extremsten "Übertreibungen" & fehlender "Wachsamkeit" zumindest für einige Tage der Vergangenheit anhören..... ;-)

WSJ Spin Barry Ritholtz

But it doesn’t take much looking to see other, more plausible, less politically motivated explanations than the floated Volcker/Obama proposal.

The market’s biggest losers were not finance related issues, but rather were commodity-related stocks.

While the financial sector suffered a 3% decline after some disappointing earnings from various banks, it was the commodities sector that got whacked 4.3%. China made a major announcement they were restricting bank lending to cool inflation and slow the economy.

The WSJ article? Never so much as mentioned China or commodities.

Oh boy.....WSJ goes Yellow Press......When i meant Wall Street Finest would spin the correction i had folks like Cramer, Strategist, Analysts, Guest on Bubblevision etc in mind.....

WSJ auf Bildzeittungsniveau.... Muß gestehen das ich mit der Behauptung das die überfällige Korrektur von den "Experten" Washington in die Schuhe geschoben wird eher an die üblichen Verdächtigen wie Volkswirten, Analysten, Strategen und regelmäßigen Gesten in den Medien gedacht habe.....

Chinese Banks Already Lend Out 20% Percent Of Targeted Loan Growth For 2010 Withing The First Two Weeks Of January

Does anybody remember my post from last week....? Thank god there are almost no ( other ) signs of "froth" & "complacency".... ;-)

Habe eigentlich meinem Posting von letzter Woche wenig hinzuzufügen.....Gottseidank sind ja ansonsten weit und breit keinerlei Anzeichen von "Übertreibungen" & fehlender "Wachsamkeit" zu erkennen.... Ansonsten könnte einem doch glatt Angst und Bange werden... ;-)

China Asks Some Banks to Limit Lending on Insufficient Capital Bloomberg

China has told some banks to limit lending and will restrict overall credit growth in the nation to 7.5 trillion yuan

ICBC, Bank of China and other lenders have effectively stopped granting new loans after the banking system extended about 1.5 trillion yuan in new credit during the first two weeks of this month, Market News International reported today

This equals almost 30% of the total 2008 volume.....Looks like China still needs more Ghost Towns .... ;-)

Die o.g. Zahl entspricht ca. 30% der Kreditvergabe die im gesamten Jahr 2008 stattgefunden hat... Sieht so aus als wenn China noch nicht genügend Ghost Towns in die Steppe gesetzt hat.... ;-)

Update: FT Alphaville

.....but the latest figures, issued Tuesday, show that full-year property sales in China zoomed by 75.5 per cent from a year ago to Rmb4,399.5bn($644bn), with residential sales jumping a whopping 80 per cent, according to the National Bureau of Statistics.

Sounds fairly bubbly to us, particularly considering that Chinese home prices rose nearly 8 per cent in December alone, the fastest growth in 18 months, despite new attempts by Beijing to cool speculative zeal.

Shanghai mortgages rise 1,600% in 2009 China Economic Review

Banks lent out US$14.58 billion in new mortgages in Shanghai in 2009, a 1,600%increase from the previous year, the South China Morning Post reported.

Of the total, US$5.7 billion went to buyers of new properties and US$8.88 billion to those buying second-hand properties, according to the People's Bank of China.

Average prices of Shanghai homes rose 68% from 2008

WSJ

"With exports facing hard times, real estate has become an important pillar of China's economic growth," said Ji Zhu, professor of economics at Beijing Technological and Business University. "No one wants to see housing prices fall," he argued— not investors, not property developers, and certainly not government officials.

HERDING......

Goldman: World Markets Teetering At Post Crisis Highs, All Betting On China BI



HORDING

What really drove Chinese commodity imports? FT Alphaville

Further to the suspicion that much in the way of Chinese metals imports are related to schemes to game the cheap money there by circumventing capital controls – -whether in order to bet on Yuan appreciation or commodity price rises

Havn´t heard the word "SUSTAINABLE" for a long long time.......

Habe merkwürdigerweise den Begriff "SELBSTRAGEND" bzw. "NACHHALTIG" lange nicht mehr im Zusammenhang mit den Märkten zu hören bekommen......

"Enron-Esque Characteristics" Hiding An Even More Explosive Credit Growth In China

Ob boy......Looks like the Chinese have learnt quite a bit from their western rivals....;-) All this confirms my "sceptical" view on the sustainability of the recent recovery in China...... Nice to see that this kind of creative accounting is rewarded with a big valuation premium.... You really cannot make this up..... For an up to date inside view on China i highly recommend the blog China Financial Markets from Michael Pettis. A must read.

Sieht so aus als wenn die Chinesen in Sachen Bankenbilanzierung schnell vom Westen gelernt haben.....;-) All das bestätigt mich in meiner "skeptischen" Sichtweise das was momentan in China abgeht nachhaltig ist.... Immerhin ist es nett zu sehen das solch "Kreativität" momentan mit einem gewaltigen Bewertungsaufschlag gehandelt wird..... Paßt hervorragend zum sonstigen Marktgeschehen.... ;-)Wer einen erstklassigen und vor allem zeitnahen Blick auf das Geschehen in China haben möchte für den sollte China Financial Markets von Michael Pettis Pflichtlektüre sein....

Then and now: Banks and their book value Graph FT Alphaville

China Cracks Down on Banks' Loan-Sale Practice WSJ
BEIJING—China's banking regulator has quietly cracked down on banks selling their loans to trust companies, taking aim at a little-understood category of transactions that had fueled concerns about transparency in the banking system.

The transactions at issue had enabled banks to move loans off their balance sheets by temporarily selling them to Chinese trusts, lightly regulated companies that then repackaged the loans into financial instruments for clients.

The banks promised to repurchase the loans any time between a few weeks and a few years later.

The China Banking Regulatory Commission issued a notice banning banks that sell loans to trusts from removing the loans from their balance sheets, said an executive in the risk management department of a Chinese bank who has seen the document. The notice was issue Dec. 24, but wasn't made public.

Banks have been unwilling to discuss the trust deals publicly, but analysts who had studied the transactions say the banks were using them to report lower loan totals at a time when China's government was indicating concern about credit expansion and pushing lenders to increase their capital ratios as a precaution against bad loans.

While no official data on the loan-sale practice is publicly available, Shanghai Benefit Investment Consulting, a research company, estimates that 734 billion yuan ($107.53 billion) of bank loans were packaged into trust products in 2009.

About 80% of that was issued in the second half of the year, as Beijing's concern about loan growth mounted

The volume of new bank loans more than doubled in 2009, as Chinese lenders-almost all of which are majority owned by the state—assisted government efforts to stimulate the economy.

Not all the loans sold to trusts fall into the category barred by the CBRC notice, but the order appears to have nearly halted such transactions. According to Shanghai Benefit, only seven new trust products backed by banks loans have gone on sale this month, compared with 465 for the whole of December.

The regulatory change could add to difficulties for some Chinese banks that were already facing constraints on their lending this year by the declines in their capital-to-loan ratios as a result of last year's credit explosion.

Still, analysts say it's likely to be another banner year for bank lending in China, with many forecasting 2010's new loans will be between seven trillion and eight trillion yuan, down from around 9.5 trillion last year but far above the annual average for previous years.

> To put this number into perspective the loan figure for a booming 2008 was under 5 trillion Yuan......

> Um das in Verhältnis zu setzen muß man wissen das im Boomjahr 2008 unter unter 5 Billion Yuan an Krediten vergeben worden sind....

UPDATE:

> Looks like they have already "achieved" almost 8% percent of their 2010 lending target ( 12% of the 2008 loans....) within the first week.... Second UPDATE: Chinese Banks Already Lend Out 20% Percent Of Targeted Loan Growth For 2010 Withing The First Two Weeks Of January & Visualizing "Froth" In China....... Hey, but "Don´t Call It A Bubble"...... ;-)

> Sieht ganz so aus als wenn die chinesischen Banken bereits knapp 8% der für 2010 ( oder 12% der im Jahr 2008 ausgegebenen Kredite ) "vorgesehenen" Kreditvergaben in der ersten Januarwoche ausgekehrt hätten......"Don´t Call It A Bubble"...... ;-) Zweites UPDATE Chinese Banks Already Lend Out 20% Percent Of Targeted Loan Growth For 2010 Withing The First Two Weeks Of January & Visualizing "Froth" In China....... ....Bernanke würde jetzt sagen "Don´t Call It A Bubble"......

Between January 4 and 8, commercial banks issued loans worth 600 billion yuan, a new high in years. Caing.com

It seems that China's commercial banks have slowed the lending pace due to warnings from the People's Bank of China (PBOC) and banking regulator. However, new statistics showed that the pace actually accelerated during the first week of 2010.

New lending by banks reached 600 billion yuan, with the five biggest banks accounting for 280 billion yuan, according data obtained by Caixin Media.

> Let´s hope that at least a small part from the staggering amount is related to the reintegretaion from the "funny" off balance sheet structures.....

> Bleibt nur zu hoffen das zumindest ein kleiner Teil der unglaublichen Summe darauf zurückzuführen ist das einiges wieder in die Bilanz eingegliedert worden ist.....

Update:

China Hits Brakes on Economic Stimulus WSJ

China, which for more than a year has been pushing its banks to pump out cash to offset the global downturn, abruptly reversed course Tuesday, in the clearest sign yet that Beijing has turned its attention to controlling the repercussions of that credit explosion.

Starting Monday, most Chinese commercial banks will be required to put 16% of their deposits on reserve, an increase of a half percentage point.

The new rate will effectively lock up 300 billion yuan, or around $44 billion, that might otherwise have been lent, according to Tom Orlik, China analyst at Stone & McCarthy Research Associates.

Next to the 40 trillion yuan or more in loans outstanding and a 24 trillion yuan stock market, that is a small amount.

> Sweet Babystep... Too little and definitely way too late.....

> Wie niedlich..... Bestenfalls ein Anfang und definitv erheblich zu spät.....