23 septembre 2011
The squeeze on China’s property market may be reaching a “tipping point” that drives growth lower just when exports are under threat from a global slowdown and investor confidence is plunging, said Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc. Land transactions in 133 cities tracked by Soufun Holdings Ltd. (SFUN), the country’s biggest real-estate website, fell 14 percent by area in August from a month earlier. Prices of new homes declined in 16 of 70 cities last month compared with July, according to government data.
Property construction is a mainstay of investment that last year drove more than a half of economic growth while land sales contributed 40 percent of revenues earned by local authorities that have amassed 10.7 trillion yuan ($1.67 trillion) of debt. A funding squeeze on developers risks a “domino effect” as companies needing cash cut prices, forcing others to follow, Credit Suisse Group AG said yesterday. “We’re reaching a tipping point where land sales are dropping much faster than before, developers are losing more access to bank financing, and housing prices are showing weakness,” Nomura’s Zhang said in an interview in Beijing yesterday. The People’s Bank of China has raised interest rates five times over the past year, curbed lending to property developers and raised down payments on home loans as part of Premier Wen Jiabao’s campaign to rein in surging consumer and property prices. The government has also limited purchases of housing in cities where gains have been deemed excessive.
13 septembre 2011
A première vue, la pierre est un matériau banal et inerte. A y regarder de plus près, elle déclenche des tempêtes, au moins en France. Dès qu’un gouvernement y touche, la machine à débiter des sornettes s’emballe. Nous en avons ces jours-ci un bel exemple. En raclant les fonds de tiroir pour trouver une dizaine de milliards d’euros, le gouvernement a décidé de relever une collection d’impôts. La mesure qui rapportera le plus - 2 milliards -consiste à taxer davantage les plus-values immobilières. Le Français qui revend un logement plus cher qu’il ne l’a acheté paiera davantage d’impôt sur ce gain, sauf s’il habite ce logement ou s’il le détient depuis plus de trente ans. Que n’a-t-on entendu sur cette mesure ! Menace majeure sur un secteur majeur, inéquité, spoliation des Français moyens, voire atteinte au droit de propriété… Donnons cette fois-ci arbitrairement le pompon à Hervé Morin.
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6 juillet 2011
Commodity bull Jim Rogers says hedge fund managers such as Jim Chanos of Kynikos Associates and Hugh Hendry of Eclectica, who have been shorting Chinese related stocks and credits, have got it wrong. "Those guys have been dead wrong for two years. Chanos said two years ago he was shorting China and it’s going to collapse," Rogers told CNBC. "I know Jim and I like Jim and admire Jim but he’s been dead wrong for two years, I hope he’s still solvent. If he did the things he said he’s doing, he’s losing a lot of money," Rogers added.
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4 juillet 2011
Stephen S. Roach, a member of the faculty at Yale University, is Non-Executive Chairman of Morgan Stanley Asia and the author of The Next Asia.
NEW HAVEN – The global economy is in the midst of its second growth scare in less than two years. Get used to it. In a post-crisis world, these are the footprints of a failed recovery.
The reason is simple. The typical business cycle has a natural cushioning mechanism that wards off unexpected blows. The deeper the downturn, the more powerful the snapback, and the greater the cumulative forces of self-sustaining revival. Vigorous V-shaped rebounds have a built-in resilience that allows them to shrug off shocks relatively easily. But a post-crisis recovery is a very different animal. As Carmen Reinhart and Kenneth Rogoff have shown in their book This Time is Different, over the long sweep of history, post-crisis recoveries in output and employment tend to be decidedly subpar. Such weak recoveries, by definition, lack the cushion of V-shaped rebounds. Consequently, external shocks quickly expose their vulnerability. If the shocks are sharp enough – and if they hit a weakened global economy that is approaching its “stall speed” of around 3% annual growth – the relapse could turn into the dreaded double-dip recession.
That is the risk today. There can be no mistaking the decidedly subpar character of the current global recovery. Superficially, the numbers look strong: world GDP rebounded by 5.1% in 2010, and is expected to rise another 4.3% in 2011, according to the International Monetary Fund. But because these gains follow the massive contraction that occurred during the Great Recession of 2008-2009, they are a far cry from the trajectory of a classic V-shaped recovery.
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1 juillet 2011
Manhattan apartment sales and prices fell in the second quarter from a year earlier, as the absence of a federal tax credit created less urgency to complete deals. Purchases of condominiums and co-ops declined 3.8 percent from a year earlier to 2,650, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. The median price of co-ops and condos that changed hands in the borough dropped 5.5 percent to $850,000.
In 2010, buyers in contract rushed to close deals before an initial June 30 expiration of a government tax credit of as much as $8,000. That deadline “artificially inflated” sales volume and values for the second quarter, Jonathan Miller, president of New York-based Miller Samuel, said in a telephone interview. For the three months ended yesterday, the number of purchases and property values were about the same as they might have been a year earlier without the incentive, he said. “People don’t feel as though prices are going down, but there’s not this overwhelming feeling that prices are increasing by the day,” said Pamela Liebman, chief executive officer of the Corcoran Group brokerage, which also released a report on the Manhattan sales market today. “People feel that they can wait a little bit to find what they want.” New York City’s jobless rate was at a 25-month low of 8.6 percent in May, unchanged from the previous month and down 1 percent from a year earlier, the state Department of Labor said on June 16. The city’s financial industry showed a net gain of 10,400 jobs in the 12 months through May.
20 juin 2011
It is never reassuring when a chief executive admits to being scared. But Hong Kong’s Donald Tsang is right: the cost of property in the city really is “quite frightening”.
From Mumbai to Melbourne, real estate prices are stalling as higher interest rates take hold. Not in Hong Kong, though, where the widely followed Centa-City leading index of residential prices is still rising, prompting a fourth round of corrective measures from the central bank earlier this month. For locals, there are clear incentives to load up: still-affordable mortgage rates, and a persistently weak currency. Over the past ten years the Hong Kong dollar has depreciated against everything bar the Mexican peso.
The more important driver, though, comes from over the border. For mainland Chinese, a 22 per cent gain for the renminbi since 2001 is reason enough to go long Hong Kong. Further, an apartment in the city is a hedge against instability – safely away from the long arm of Beijing, yet still close to home. Retail sales data show mainlanders’ ferocious purchasing power. Jewelry and watches accounted for 21 per cent of the total value of retail spending in March, for example – higher than all food, booze and supermarket bills combined. At a recent sale by Sun Hung Kai, the world’s largest listed developer, buyers put down 20 per cent with nothing to follow until possession in August 2013. But despite such tactics, more than 90 per cent of units went within a day. Hongkongers mutter about the extraordinary 1997 peak, achieved before the handover from the UK to China. That is two percentage points away in nominal terms, but the main Centa-City index is still 24 per cent below that level, on a trade-weighted, exchange rate-adjusted basis. As long as China keeps humming, prices can, and probably will, go higher.
18 avril 2011
I recently took two trips to China just as the government launched its 12th Five-Year Plan to rebalance the country’s long-term growth model. My visits deepened my view that there is a potentially destabilizing contradiction between China’s short- and medium-term economic performance. China’s economy is overheating now, but, over time, its current overinvestment will prove deflationary both domestically and globally. Once increasing fixed investment becomes impossible – most likely after 2013 – China is poised for a sharp slowdown. Instead of focusing on securing a soft landing today, Chinese policymakers should be worrying about the brick wall that economic growth may hit in the second half of the quinquennium. Despite the rhetoric of the new Five-Year Plan – which, like the previous one, aims to increase the share of consumption in GDP – the path of least resistance is the status quo. The new plan’s details reveal continued reliance on investment, including public housing, to support growth, rather than faster currency appreciation, substantial fiscal transfers to households, taxation and/or privatization of state-owned enterprises (SOEs), liberalization of the household registration (hukou) system, or an easing of financial repression.
China has grown for the last few decades on the back of export-led industrialization and a weak currency, which have resulted in high corporate and household savings rates and reliance on net exports and fixed investment (infrastructure, real estate, and industrial capacity for import-competing and export sectors). When net exports collapsed in 2008-2009 from 11% of GDP to 5%, China’s leader reacted by further increasing the fixed-investment share of GDP from 42% to 47%.
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18 février 2011
China’s January new home prices rose from a year earlier in all but two of the 70 cities monitored by the government, defying property curbs to keep housing affordable.
New home prices in the capital Beijing advanced 6.8 percent in January from last year, while Shanghai climbed 1.5 percent, the statistics bureau said on its website today, initiating a new method of calculating prices. Haikou had the biggest gain, surging 21.6 percent, and 10 cities had increases exceeding 10 percent. Housing values in the southeastern city of Quanzhou and the western city of Nanchong fell. China extended property curbs last month, including raising the minimum down payment for second-home purchases, telling local governments to set price targets on new properties, and introducing taxes for residential homes in Shanghai and Chongqing. The central bank raised interest rates on Feb. 8 for the third time in four months. “The new data clearly shows home prices are still rising and the government curbs only suppressed transaction volumes,” said Jinny Yan, Shanghai-based economist at Standard Chartered Plc. “The ultimate problem is monetary policy — the government should at least raise interest rates two more times this year because if the liquidity is not tightened, it would be impossible for home prices to fall.”
27 janvier 2011
Bloomberg – 27/01/2011
Global investors are bracing for the end of China’s relentless economic growth, with 45 percent saying they expect a financial crisis there within five years. An additional 40 percent anticipate a Chinese crisis after 2016, according to a quarterly poll of 1,000 Bloomberg customers who are investors, traders or analysts. Only 7 percent are confident China will indefinitely escape turmoil. “There is no doubt that China is in the midst of a speculative credit-driven bubble that cannot be sustained,” says Stanislav Panis, a currency strategist at TRIM Broker in Bratislava, Slovakia, and a participant in the Bloomberg Global Poll, which was conducted Jan. 21-24. Panis likens the expected fallout to the aftermath of the U.S. subprime-mortgage meltdown.
On Jan. 20, China’s National Bureau of Statistics reported that the economy grew 10.3 percent in 2010, the fastest pace in three years and up from 9.2 percent a year earlier. Gross domestic product rose to 39.8 trillion yuan ($6 trillion). Any Chinese financial emergency would reverberate around the world. The total value of the country’s exports and imports last year was $3 trillion, with about 13 percent of that trade between China and the U.S. As of November, China also held $896 billion in U.S. Treasuries. The trade and investment links between the two nations were underlined with Chinese President Hu Jintao’s visit last week to the White House for meetings with President Barack Obama.
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13 octobre 2010
Les Echos – 11/10/2010
En principe, le prix des logements anciens augmente à peu près comme le revenu des ménages, selon l’économiste Jacques Friggit. Suite à leur envolée, les prix des logements anciens pourraient chuter de 30 à 35% d’ici à 2015 et retrouver ainsi leur corrélation de long terme.
Combien de temps durera l’euphorie qui règne actuellement sur le marché des logements, en particulier dans les secteurs tendus comme l’Ile-de-France ? Selon un récent sondage de la FNAIM, les ménages anticipent la poursuite de la hausse de l’immobilier ancien. A moyen terme, cet avis n’est pas partagé par l’économiste Jacques Friggit, chargé de mission au Conseil général de l’environnement et du développement durable. Il scrute l’évolution depuis 1965 du revenu disponible par ménage sur l’ensemble de la France et l’indice du prix des logements anciens en France. « De 1965 à 2000, l’indice du prix des logements anciens a augmenté approximativement comme le revenu par ménage et a évolué dans un « tunnel » autour de ce dernier. » observe-t-il. Mais, depuis le début des années 2000, on assiste à une envolée du prix des logements anciens rapporté au revenu des ménages. Certes la courbe des prix a reculé d’environ 10% en 2009, mais elle a depuis, repris sa hausse. Résultat : l’indice des prix des logements anciens en France dépasse de 70% le fameux tunnel de Friggit.
21 avril 2010
April 21 (Bloomberg) — China’s “excessive” credit expansion and surging real estate prices are “danger signals” that growth is peaking, investor Marc Faber said. “There are some symptoms of a bubble building in China, with the increase in foreign exchange reserves, rapidly rising property prices,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview today. “From here on, the China economy will slow down regardless. Whether it will crash this year or later, I don’t know.”
China, the world’s third-biggest economy, yesterday ordered developers not to take deposits for sales of uncompleted flats without proper approval. This adds to curbs on loans for third- home purchases, increased down-payment requirements and higher mortgage rates announced in the past week, after property prices in 70 cities jumped a record 11.7 percent in March. China’s economy grew 11.9 percent in the first quarter, the most in almost three years, fanning concern that record lending is creating asset bubbles. The government has twice this year told banks to set aside more reserves and pace credit growth. “If you believe the government can steer the economy like a car, that’s not my view,” said Faber, who oversees $300 million at Hong Kong-based Marc Faber Ltd. Government measures “always lead to unintended consequences.” Faber spoke on the sidelines of the Asian Public Real Estate Association Forum in Singapore.
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8 avril 2010
April 8 (Bloomberg) — China’s property market is a bubble that may burst by as early as this year, according to hedge fund manager James Chanos.
The world’s third-biggest economy may need to keep up the pace of property investment because up to 60 percent of its gross domestic product relies on construction, said Chanos. The bubble may begin to “run its course” in late-2010 or 2011, he said in an interview on “The Charlie Rose Show” that will air on PBS and Bloomberg TV. China is “on a treadmill to hell,” said Chanos, who said in January the nation is Dubai times a thousand. “They can’t afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing.”
Property prices in China rose at the fastest pace in almost two years in February even after officials this year re-imposed a tax on homes sold within five years of their purchase to curb speculation and ordered banks to set aside more funds as reserves to cool lending. The boom in China’s real estate has fueled concern that China may face a collapse seen in Dubai that has hurt the ability of some of its companies to repay debt. Since his January prediction, Chanos, the founder of Kynikos Associates Ltd, has been joined by Gloom, Doom & Boom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China’s property market. Chinese state and local governments are among the most leveraged to property-related borrowings and the nation will “ultimately” have to nationalize a lot of the bad loans that will arise from the end of the bubble, Chanos said.
China’s foreign currency reserves will be “one asset” that can be used to fund a cleanup of the banking system, he said. The country has accumulated a record $2.4 trillion of reserves, and $889 billion of U.S. government debt, partly a consequence of its exchange-rate policy. Chanos was one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp. The investor said he is short-selling Chinese developers as well as companies supplying building-related materials to the country, without identifying any stocks. In a short sale, investors bet on declines in securities by borrowing stock to sell on the expectation it can be purchased at a lower price before handing it back.
5 mars 2010
March 5 (Bloomberg) — Premier Wen Jiabao warned of “latent risk” in China’s banks and pledged to crack down on property speculation as the government faces the consequences of flooding the economy with money to drive growth. “The domestic economy still faces some prominent problems,” Wen, 67, said in a speech in Beijing to the National People’s Congress, similar to the U.S. State of the Union address. He also cited excess capacity in manufacturing and weak support for rural-income growth.
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