Andy Seah, a former economist of an American FI, once wrote about the housing bubble of China, using the analogy of the hairy crab being cooked. He said in China, the cook submerges the whole live crab in a pot of cold tap water. The happy crab becomes very active, thinking it is back to its native lake in Central China. Very soon the stove fire heats up the pot to a simmering, then boiling point, killing the poor crustacean. This is the exact situation of what the property developers in China are in now. They brainwash themselves the Party is on again. Even our Singapore GLCs in the same business get infected by their Chinese partners by braining themselves too. An economic collapse on the cusp of breaking out? This time from this Asian communist country, whose Ego has gone too big for her head. Would lay off GLP, Capitaland, and rest of the GLCs who have overly exposed themselves in China.
Chinese economy collapse is over exagerated for the following reasons
1) Chinese has one of the highest saving in the world. So, it is very unlikely Chinese will default on their loans. Frankly, the demand is still outsripped supply.
2) The stock market bubble has been squeezed out for the last 4 years, you could call this soft landing for stock market.
3) Chinese Government has been squeezing housing bubble for the last 2 years or so, they are not so succesful in the first year and they are putting more pressure in the last one year by increasing bank reserve, interest rate and limiting size of lending. This has cause some developers and speculators to go bust as what you are seeing now.
4) The only problem for banks is local government loan which is about 10 trillion Yuan, just wonder how much of that is NPL? Probably only communist centre government who has deep pocket knows the figure.
Andy Seah, a former economist of an American FI, once wrote about the housing bubble of China, using the analogy of the hairy crab being cooked.
ReplyDeleteHe said in China, the cook submerges the whole live crab in a pot of cold tap water. The happy crab becomes very active, thinking it is back to its native lake in Central China. Very soon the stove fire heats up the pot to a simmering, then boiling point, killing the poor crustacean.
This is the exact situation of what the property developers in China are in now. They brainwash themselves the Party is on again.
Even our Singapore GLCs in the same business get infected by their Chinese partners by braining themselves too.
An economic collapse on the cusp of breaking out? This time from this Asian communist country, whose Ego has gone too big for her head.
Would lay off GLP, Capitaland, and rest of the GLCs who have overly exposed themselves in China.
http://www.youtube.com/watch?v=buOY4d4eiZk
ReplyDeleteChinese economy collapse is over exagerated for the following reasons
ReplyDelete1) Chinese has one of the highest saving in the world. So, it is very unlikely Chinese will default on their loans. Frankly, the demand is still outsripped supply.
2) The stock market bubble has been squeezed out for the last 4 years, you could call this soft landing for stock market.
3) Chinese Government has been squeezing housing bubble for the last 2 years or so, they are not so succesful in the first year and they are putting more pressure in the last one year by increasing bank reserve, interest rate and limiting size of lending. This has cause some developers and speculators to go bust as what you are seeing now.
4) The only problem for banks is local government loan which is about 10 trillion Yuan, just wonder how much of that is NPL? Probably only communist centre government who has deep pocket knows the figure.