China - Housing 01 (May 08 - May 10)

[winston]

Hi mrEngineer,

Yes, I agreed with you that it's impossible for them to calculate such things.

Intuitively, I dont think the market has priced everything in yet. In addition, if the banks starts withdrawing liquidity to the sector, there could also be a double whammy.

In the meantime, I'm updating my watchlist

Take care,
Winston

[winston]

Not vested.

DJ MARKET TALK: Wait For 20%-30% Correction In China Ppties-ICBCI

1141 [Dow Jones] Most HK-listed China property stocks still lower, even after 2-day selloff on concerns more sector tightening measures likely, after Beijing vowed to curb rising property prices.

While most agree long-term picture of mainland property market remains bright, short-term consolidation in physical property market appears likely, probably too early trying to bargain-hunt property stocks.

ICBC International's Ernie Hon advises investors to be patient, wait for 20%-30% correction from recent peaks (mostly hit earlier this month) to consider re-entry.

China Overseas Land (0688.HK) down 2.2% at HK$16.58, adding to 2-day 7.5% fall; now off 10.9% vs month-to-date high of HK$18.60;

Shimao Property (0813.HK) down 0.1% at HK$15.08, off 15.3% vs recent peak

Source: Dow Jones Newswire

[winston]

China raises Land Downpayment to 50% from the current 20% to 30%. Should hurt the smaller developers.

[winston]

DJ MARKET TALK: Mainland Developers Set To Fall; More Tightening

0919 [Dow Jones] Investors' fears of likely more tightening measures targeting mainland property sector coming true, with latest being joint statement from MOF, PBOC, Ministry of Land and Resources, National Audit Office, Ministry of Supervision, that property developers must make minimum down payment of 50% on land purchases, also must make full payment within one year of sale agreement.

This further measure as Beijing steps up efforts to curb sharp increases in housing prices; developer stocks set to fall again today, not due so much to measures' specific effect, but it underscores Beijing's tough stance.

Most HK-listed mainland developers falling since Tuesday; in 3 sessions, China Overseas Land (0688.HK) down 9.3%, Shimao Property (0813.HK) down 9.6%, Sino-Ocean Land (3377.HK) off 13.9%, Greentown China (3900.HK) off 16.0%, vs HSI down 3.3%

Source: Dow jones Newswire

[winston]

Not vested. To also note the noise from the CLSA Chinese Property Analyst

DJ MARKET TALK: China Property Plays Down On New Land Sale Rule

0224 GMT [Dow Jones] Mainland property stocks down on new rule announced yesterday requiring property developers to make minimum downpayment of 50% on land purchases;

But Southwest Securities analyst Xiao Jian says new rule's practical impact on big listed property firms limited because they have high level of land reserves, so they can develop projects in coming few years even if they don't buy new land.

Also, while new rule may put pressure on liquidity (previously, they were required to make 50% downpayment), unlike small, mid-sized developers, they can raise funds by issuing new shares, bonds.

Xiao adds, however, investor confidence in big listed developers is being undermined "not because they fear this new rule, but because they fear the rule is only one of the series of tightening measures Beijing will (likely) impose on the property sector in the near future."

Source: Dow Jones Newswire

[winston]

China has told property developers they must make a minimum downpayment of 50% on land purchases from the government, and fully pay for the land purchases within one year of a sale agreement.

Developers won't be permitted to buy new land if they fail to pay off a land purchase in time, according to the statement, which was jointly issued by the Ministry of Finance, the People's Bank of China, the Ministry of Land and Resources, the National Audit Office, and the Ministry of Supervision.

The new rules also require local governments to fully reflect the proceeds of land sales in their budgets and forbid them from giving discounts to developers or allowing developers to delay payments

Source: Reuters

[winston]

Not vested.

DJ MARKET TALK: Guotai Cuts China Property Sector To Underperform

1142 [Dow Jones] Guotai Junan cuts China property sector to Underperform from Neutral, as sector trading at 12.5X FY10 P/E, with average discount to NAV of 19.1%, views as not fully reflecting China developers' dual risks in 2010: decreasing consumption demand and policy contraction.

House suggests Reduce on most of China developers. "To keep social stability and crack down investment demand, we predict China government will cancel most monetary support on developers in 2H 2010, property tax may start in Shenzhen soon."

Among China developers, China Overseas (0688.HK) down 0.6% at HK$16.22, China Resources Land (1109.HK) down 2.4% at HK$17.00, R&F (2777.HK) down 1.5% at HK$13.20.

Source: Dow Jones Newswire

[winston]

China Property Stock Index Looks ‘Bearish’: Technical Analysis By Shiyin Chen

Dec. 24 (Bloomberg) -- China’s benchmark for property stocks, tipped by Bank of America Corp. as an “exceptional” predictor of global markets, may extend losses after breaching its 200-day moving average, DMG & Partners Securities Pte said.

http://www.bloomberg.com/apps/news?pid= ... VGNcviJuSY

[winston]

I'm starting to pick up some news that it's very hard to get a mortgage in China nowadays..

I have a friend who just bought a new apartment and it took him about 4 months to get a mortgage. In his case, he can only borrow from a particular bank as that developer has some sort of exclusive agreement with that bank.

Another friend just sold his house for RMB11m. After a few months, the buyer has still not been able to get the mortgage of about RMB3.8m. If that buyer is not able to get the mortgage by Feb 1, 2010, the buyer would lose the deposit of RMB 1m.

Under this scenario, I cant see how Chinese properties can continue on it's steep tangent upwards. However, I'm still not expecting a correction until 2H 2011.

[millionairemind]

W - I just had lunch with a friend who is currently stationed in Shanghai and came back to Singapore for vacation.

He remarked to me that newly wedded couple need their parents on both sides to chip in just to be able to afford a small apartment in Shanghai. If their parents don't have enough, then its the grandparents turn to chip in... crazy!!!