atans1

Posts Tagged ‘China property’

Perennial Retail Trust: the case against

In China, Property, Reits on 03/06/2011 at 10:36 am

In today’s ST, Perennial China Retail Trust took out a full-page ad in colour in ST to extol the IPO’s merits.

Two pages away, ST carried a story headlined ” CapitaLand’s share dip linked to China”. In juz slightly smaller type face, the headline went on, “Poor showing due to concerns over firm’s greater exposure, vulnerability to policy changes”.

If I were Perennial, I’d ask ST for a refund. This headline sums up the thesis why this is an IPO to avoid.

China: Rerun of US Sub Prime? Part II

In Banks, China on 13/08/2010 at 5:25 am

Chinese banks have been ordered to account for around Rmb2,300bn ($340bn) in off-balance sheet loans in a move that could put some lenders under serious stress and require another large round of capital-raising, reports FT.

Lenders must put all loans sold or transferred to lightly regulated Chinese trust companies back on their books by the end of 2011. And must stop using “informal securitisation” to evade regulatory requirements.

Trying to ensure that banks don’t do what Citi, Merrill Lynch and other US banks were doing? Concealing their leverage albeit legally.

Reminder: Other big problematic numbers are loans to local governments, more than US$230bn of which are considered to be at serious risk of default, and real estate exposure, which accounts for roughly one-tenth of the big banks’ corporate loan books. FT

We live in interesting times.

China: Rerun of US Sub Prime? Part I

In China, Property on 12/08/2010 at 5:43 am

In 2009,  banks were ordered to increase their loan books by a third.  The result has been a sharp rise  in real estate prices and the pace of construction.

A recent National Bureau of Economic Research paper, “Evaluating Conditions in Major Chinese Housing Markets”, notes that Beijing land prices have nearly tripled since early 2008. Land sales have become the main source of income for local governments.

Some Rmb10,000bn (£946bn, €1,129bn, $1,475bn) of bank loans have been made local government infrastructure projects. Meanwhile, Chinese banks are repackaging their loans and selling them on to investors, says Fitch.

Sounds a bit too close to what was happening in US, where everything depended on rising house prices.

We shall see if the results are the same.

China: Command & Control

In China, Economy, Property, Temasek on 23/04/2010 at 5:15 am

As the loan officers for a regional branch of a major Chinese bank were preparing to issue more loans their computer screens froze. It was not a system failure due to Vista problems, rather the bank’s intranet network had been deliberately shut down to stop new loans being made. Full article

The purpose of the above is to illustrate that if the authorities feel the need to control the property market, they can be ruthless.

China must tackle its property bubble for the sake of economic health and social stability, even if the market feels some short-term pain in the process, an official financial newspaper said on Thursday.

Monetary tightening, along with steps to control housing demand and expand supply, are the right policy choices for the government, the China Securities Journal said.

The front-page commentary adds to the impression that officials are determined to make a success of their latest crackdown on property speculation. Previous attempts to cool prices have been tempered by a fear of over-tightening because the property sector is a pillar of the economy. Reuters/ NYT report

So investors in S’pore property counters with big exposures in China, be warned.

http://atans1.wordpress.com/2010/02/03/capland-what-price-the-mega-china-deal/

I’m sure Temasek and its group cos are aware of how brutal the Chinese authorities can be.

http://atans1.wordpress.com/2010/02/08/tlcs-in-china-groupthink-or-mastermind-at-work/

But based on the Merrill Lynch/ BoA fiascos, who knows?


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