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The Masked Tulip

The Music Just Ended: "wealthy" Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash

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Some interesting information here about Hong Kong house prices - there is apparently a frenzy to liquidate property assets.

Property agents said mainland Chinese own close to a third of the existing homes that are now for sale in Hong Kong - up 20 percent from a year ago.

Many are offering discounts of 5-10 percent below the market average - and in some cases as much as 20 percent - to make a quick sale, property agents and analysts said.

The Music Just Ended: "Wealthy" Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash

http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash

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Some interesting information here about Hong Kong house prices - there is apparently a frenzy to liquidate property assets.

The Music Just Ended: "Wealthy" Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash

http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash

Fingers Xed they soon start doing ditto in London.

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Fingers Xed they soon start doing ditto in London.

Sadly I think it'll have the opposite effect as CNY crashes those properties will still be rising weekly in local currency - even if they start dropping in GPB.

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The Chinese are the new Japanese.

Been saying this on my regular visits to Taiwan and China for several years no but no-one can see the credit bubble all around them.

I really don't know how they manage it but I've recently seen friends of my wife - academics - pay over £500k for a 3-bed apartment in a nice but nondescript block in Nanjing. There is nothing supporting such valuations except the flood of funny money, salaries are maybe a third to half of what they are even here (and even here, academic salaries are pretty rubbish). This has been replicated on a very widespread scale as people have found themselves in possession (somehow) of oodles of cash as well as access to apparently limitless credit.

There are only two possible outcomes - a yuan crash and massive inflation (unlikely) - or a property crash on the Tokyo scale or even bigger.

People have been drawing straight-line graphs of China's rise for a long time now but nothing is ever straight line. I'm not by nature a tin foil hatter - I still think Western economies will pull through somehow if only by changing the rules of the game - but I just can't see how China unwinds without massive pain across the board, possibly exceeding that of Japan (which had a far more mature economy and as well as a more stable society to cope with the shock).

The whole of Chinese history is one of extremes, excesses and over-reactions - extremely turbulent especially at the boundaries of change. This will not end well. I fear for Taiwan - no-one has talked about this in the Ukraine context, but China must be looking at the West's feeble reaction and thinking that this is its moment, an ideal distraction from impending pain all around.

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I still think Western economies will pull through somehow if only by changing the rules of the game - but I just can't see how China unwinds without massive pain across the board, possibly exceeding that of Japan (which had a far more mature economy and as well as a more stable society to cope with the shock).

The Chinese government doesn't have to consider the votes of over 55s in every policy they make.

They could well be able to enforce a quick/unpalatable solution and fix the situation in a timely way, rather than create 3 decades of inter-generational theft because only one section of the community can be arsed to vote.

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The Chinese government doesn't have to consider the votes of over 55s in every policy they make.

They could well be able to enforce a quick/unpalatable solution and fix the situation in a timely way, rather than create 3 decades of inter-generational theft because only one section of the community can be arsed to vote.

Which party would you vote for to even things out?

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The Chinese government doesn't have to consider the votes of over 55s in every policy they make.

They could well be able to enforce a quick/unpalatable solution and fix the situation in a timely way, rather than create 3 decades of inter-generational theft because only one section of the community can be arsed to vote.

Well.. China may not have direct votes, but even a dictatorship with a large and fairly reliable army will have problems if it seriously annoys a large chunk of the population. And they do have an aeging population.

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Been saying this on my regular visits to Taiwan and China for several years no but no-one can see the credit bubble all around them.

I really don't know how they manage it but I've recently seen friends of my wife - academics - pay over £500k for a 3-bed apartment in a nice but nondescript block in Nanjing. There is nothing supporting such valuations except the flood of funny money, salaries are maybe a third to half of what they are even here (and even here, academic salaries are pretty rubbish). This has been replicated on a very widespread scale as people have found themselves in possession (somehow) of oodles of cash as well as access to apparently limitless credit.

There are only two possible outcomes - a yuan crash and massive inflation (unlikely) - or a property crash on the Tokyo scale or even bigger.

People have been drawing straight-line graphs of China's rise for a long time now but nothing is ever straight line. I'm not by nature a tin foil hatter - I still think Western economies will pull through somehow if only by changing the rules of the game - but I just can't see how China unwinds without massive pain across the board, possibly exceeding that of Japan (which had a far more mature economy and as well as a more stable society to cope with the shock).

The whole of Chinese history is one of extremes, excesses and over-reactions - extremely turbulent especially at the boundaries of change. This will not end well. I fear for Taiwan - no-one has talked about this in the Ukraine context, but China must be looking at the West's feeble reaction and thinking that this is its moment, an ideal distraction from impending pain all around.

The USA has a direct guarantee in place over Taiwan. If Ukraine were part of NATO Russia could not have done what it did, which was why it had to act before Ukraine joined up.

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The Chinese government doesn't have to consider the votes of over 55s in every policy they make.

They could well be able to enforce a quick/unpalatable solution and fix the situation in a timely way, rather than create 3 decades of inter-generational theft because only one section of the community can be arsed to vote.

But it does have to provide at least the illusion of growth or social cohesion will end. Revolution in China is a real memory.

You have a massive demographic problem. Included in this is an imbalance of male to females, leaving a nice cohort of angry young men, with no future and no chances of children.

Unless they have an outside boogey man to send them to fight it could get ugly in China soon. Nuclear weapons have seriously curtailed the traditional options available to large states.

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Which party would you vote for to even things out?

I did think about appending something on that - but didn't want to complicate the point.

I think it's a chicken/egg situation - right now there are no parties who want to correct the injustice because there are no votes in it.

If under 40s start voting that parties would be more inclined to support policies to retain those votes.

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Some interesting information here about Hong Kong house prices - there is apparently a frenzy to liquidate property assets.

The Music Just Ended: "Wealthy" Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash

http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash

Have you got your seat?

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I did think about appending something on that - but didn't want to complicate the point.

I think it's a chicken/egg situation - right now there are no parties who want to correct the injustice because there are no votes in it.

If under 40s start voting that parties would be more inclined to support policies to retain those votes.

There is more to it than that as there are many more over 40's than under 40's. Even if all the 18 to 40's turned up and voted they would still have no chance.

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That chart also makes you painfully aware why they have Help To But. The 18 to 40's are currently supporting that housing pyramid.

You can also see why it would be very easy for the BTL market to become saturated and over-invested.

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I thought it was different in Honk Kong....small island, no land.

rolleyes.gif

HK has always had very volatile property prices. The dropped by something like 50% in the Asia currency crisis for example. There's no reason to think that history has been abolished that I can think of.

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The USA has a direct guarantee in place over Taiwan. If Ukraine were part of NATO Russia could not have done what it did, which was why it had to act before Ukraine joined up.

In theory. Whether an increasingly isolationist USA would go to war to defend a bunch of Chinese against another bunch of Chinese in support of a promise made at the beginning of the Cold War is another question. And who would loan them the money to fight? :huh:

Taiwan's Green Party are a serious bunch of nut jobs (looking back with nostalgia to the days when they were a Japanese colony for example - part of the reason for that being that the incoming KMT in 49 didn't treat the local Hokkien-speaking Taiwanese population any better than the Japanese did and in some ways worse - democracy didn't take hold till the 90s). Fist fights in parliament and so on, and pretty corrupt as well). The Greens are favourites to win the next election too and perfectly capable of doing something dumb enough to provoke China, potentially playing into their hands.

In such a case the USA could easily declare 'all as bad as each other' and walk away.

Edited by montesquieu

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Could this set off a London crash?

If it's a liquidation firesale, possibly - the funds are homeward bound for deleveraging, not being bounced around.

Add on Russian repatriation of state representatives' overseas funds, probably - I think this is already happening.

Add on US pressure on UK to freeze all Russian funded assets in the Square Mile, definitely - and in that scenario we also get into trouble with gas supplies.

RK raised the issue of China support for copper price to maintain the commodity's collateral value for domestic debt - that's a big factor. For now I suppose it's a fair assumption the Hong Kongers take the first hit, but expect state buying if it hits the mainland.

On the Russian front, I doubt Putin will cross the Germans much more, so sanctions will be minimal.

As RK says, foolcast.

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You mean more Chinese money being parked in London property if things start to go tit's up over there?

Things are going tits up, so it may be time to tap the funds stored in London real estate. The HK tank will probably be emptied first, but this is deleveraging so the HK funds won't get transferred to London.

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You can also see why it would be very easy for the BTL market to become saturated and over-invested.

That argument, while correct, applies to all asset classes.

Money leaving BTL simply saturates other assets like MMF, equity yields etc.

Osborne's pension reforms, assuming they incentivise savings, will reduce the natural rate of interest in the UK.

OTOH, assuming they incentivise consumption, then they lead to de-leveraging, since pension savings consumed necessarily reduce overall debt levels.

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