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The coming Hong Kong & Shanghai property collapse
Posted by ppatio (13 days ago)
The index of the Shanghai stock exchange has lost half of its value since October 2007. And it is still going down. I guess it is only a matter of time before the overheated and overpriced property market will follow suit, and collapse like a bad souffle. Panic selling and all that.
The smart money says it will happen after the Olympics (wishful thinking maybe - there seems to be no reason why it cannot happen sooner).
Question here is: since the Hong Kong property market is behaving weird again, prices going through the roof without economic fundamentals supporting them, when can we expect our own 'implosion' ? Any tips on timing ?
Posted by leghk (13 days ago)
http://www.iht.com/articles/2008/02/03/business/property.php
This article suggests that prices should rise steadily over the next few years due to Chinese expansion coupled with US linked interest rate reductions.
IMO (an interested observer, but certainly no expert), as well as the above the tighter lending requirements here and being a long way behind in terms of sub prime lending should help stablity, although possible recession in US and reduced growth in China may reduce the gains in the property market, I dont think a crash is inevitable.
Posted by transhk (12 days ago)
ppatio. The China markets have bean beaten down 50% over the last 6 months, but are still higher than 1 year ago!
I would not be so pesimistic on HK property. The US$ will rebound when the Fed indicates that the cuts are done. Once that happens oil & gold will plummet, the US$ will rise & with the US$ peg we will be a focus. Hedge funds & long only funds who have enjoyed the comodity rally will be looking to put the money back to work as they sell commodities. This money will come back into equities, as well as luxury property in Asia.
With this commodity bubble bursting to some extent currencies like the A$ will also fall as Australia is a commodity based economy. If you earn HK$ you would be silly to buy Australian or European property at the moment as you are very likely to give up any profits on currency exchange losses.
If in HK, I would keep assets here now. We have no capital gains tax, relatively low transaction costs and a very stable economy. As the US$ rises then will be the time to look overseas, but the rise will be gradual.
Posted by ppatio (12 days ago)
And did you also notice that the Hang Seng index has lost 1/3 of its value.........?
Posted by ppatio (12 days ago)
31,900 in October 2007 down to approx. 21,000 in March 2008.
Do we see a trend here, or has the Stock Index Emperor no clothes after all ?
Posted by transhk (12 days ago)
ppatio. The HSI was at 19,384 at beginning of 2007. It fell from 23,500 to 19,300 in August, then went to 32,000 in November (very briefly). It then fell back to about 20,500 in March (very briefly) and is back at 25,881 now. We are now about 20% below a high seen very briefly in November last year. If you take the couple of days that the rally got very silly we an look at a real sustainable high of 29,200, which we are now about 12% off.
Honestly, I see volatility, but definitely not a trend.
Please be careful jumping to conclusions without digging deep. I do this for a living & hate to see people panic.
Posted by lingua (4 days ago)
It's a game between the US and China.
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