Above is an interesting video from the Wall Street Journal (WSJ) explaining how the correction underway in China’s property market is adversely affecting the wealth of China’s richest citizens.
According to the WSJ, around half of China’s 1,000 wealthiest citizens experienced financial losses in the past year, with average wealth falling 9% to $860 million from a year earlier.
The decline in housing values over the past year – the first fall since records began in 1999 – has knocked out property as the largest source for wealth for China’s richest, replaced by manufacturing (see below chart). Stock-price declines and shifts in the solar, textile and retail sectors so far this year have also contributed to the losses of the wealthy.
China’s worsening prospects helps to explain the recent net capital outflows – the first since 1998 – and why those in the know – China’s political and economic insiders – are now heading to the exit.
Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.
