Cross-posted from Investing in Chinese Stocks.
Another article, this time from China Finance Online (CNFOL), argues that property price increases will fade in the coming weeks. Developers remain skeptical of a major rebound, with many seeing govt intervention as helpful, but unable to reverse a market that has, in their view, permanently shifted, iFeng: 楼市一大信号证明房价不会大涨 背后原因曝光:
From the large market environment, the current property market landscape has changed dramatically. Yu Liang, president of Vanke Group by the end of March in the earnings call, said the property market, the central government introduced policies to boost the market will indeed play an important role, but the policy itself does not change the entire industry, from the “Golden Age” to the “Silver Age” change trend. “Silver Age” of the property, the property market supply and demand structure reversal from the previous shortage becomes localized oversupply, prices lost ground rapidly rising.
And according to the current market circumstances, in addition to a few cities, housing prices in most regions are impossible because of the introduction of the policy stimulus and rising. Eastern Region director of research at Jones Lang LaSalle Zhifeng Zhou pointed out that after the New Deal, the probability of large price tier cities, three, four-tier cities excess supply, high inventories, weak demand situation is difficult to change in the short term, they will not have rising price conditions.
…Based on the above analysis, we believe that prices rebound, just a normal reaction to a weak market, once the policy effect is digested by the market, the market will establish a new equilibrium. We expect that the market will be the extent of trading activity has improved in a few areas such as population import city, because of the substantial increase in demand and prices rose slightly, the rate of increase of about 7%, with the country’s economic growth is similar. Some cities, such as supply and demand imbalance, Ningbo, Wenzhou, Dalian, prices rose difficult.
For buyers, do not have to because the individual real estate price and disrupted their purchase plans. At this stage, the market is relatively abundant supply, even if the encounter has a price of real estate, buyers can buy similar properties to replace, rather than panic buying
A separate article says the developers willing to talk about rising prices have disappeared. At a recent trip to the Beijing Real Estate Expo, a reporter found developers are talking about everything except prices. In recent years, rising prices and the need to pre-order as the main sales point. Now, the sales people are talking about transportation, landscaping, facitilities, etc. Only one out of six agents tried to push investment and rising prices as a reason to buy.
Additionally, although public discussion focuses on rising prices, developers were actually willing to cut prices. In one case, a development in Zhouzhou, a city near Baoding in Hebei (about 1 to 1.5 hours away from Beijing) was selling for ￥7200 per sqm, up from ￥7,000 last year. However, agents said recent homes have sold for ￥7,000 and if you are willing to pre-buy, you can get a new home for ￥6000 per sqm.
Adding to woes, the stock market is drawing away speculators:
“For now, the environment does not support price increases.” Beijing Organizing Committee Secretary exhibitions Brings the case said, the better the real estate market compared to previous years, and now the country has launched a real estate registration system, to prepare for the real estate tax; On the other hand, a booming stock market, investment funds have more channels to choose from, the real estate investment is no longer a single product.
Here’s your chance to jump into the hottest casino game on planet Earth, China Futures Tumble on Trust Curbs, Expansion of Short Selling:
FTSE China A50 Index futures for April delivery tumbled 5.2 percent in Singapore at 7:43 p.m. local time, while contracts on the Hang Seng China Enterprises Index lost 3.9 percent. Regulators banned the margin-trading businesses of brokerages from using so-called umbrella trusts and allowed fund managers to lend shares to short sellers, statements on Friday showed.
Investors have used umbrella trusts, which allow for more leverage than brokerage financing, to ramp up wagers on Chinese stocks after monetary stimulus sparked a world-beating rally in the nation’s benchmark equity gauge. Permitting mutual funds to lend their holdings to short sellers would make it easier for bearish traders to bet on a retreat after the Shanghai Composite Index closed at a seven-year high on Friday.
These are good policies changes, but they will only slow stocks for a day or two. China’s regulators err on the side of caution and prudence when shifting regulations, a good thing nearly all of the time. When it comes to an emotionally driven bull market, though, there’s nothing that can stop it except a change in emotion.
If you’re up for a wild trade and understand the risk, absolutely buy the dip—but use money that would otherwise go towards lottery tickets:
While short selling on the Shanghai bourse climbed more than threefold in the past nine months and reached a record 7.46 billion yuan last week, the amount still pales in comparison to China’s $7.3 trillion market capitalization. The CSRC said Friday it also expanded the number of stocks available for short selling to 1,100.
It’ll be some time before the shorts are a factor in the market.
