Bullish China

Western housing price was going down, Russia, one of the astonishing emerging markets, also see the sign of the capital’s troubled property market–some prefer to blame “people cannot produce demand” instead of the excuse of the global crisis. It was reported about Moscow property tycoons, they lose their wealth so rapidly in the past year, even much quicker than they got the “accounting value”. Most Chinese investors have never experienced such sort of valve changing in real estate market, they cannot imagine how prices have tumbled 60 per cent inside a year even they once verified Shanghai real estate was reasonable by comparing to Moscow in 2005-2007.

The results are visible all over the Moscow, many plans and projects have been frozen. The property shock was so sudden, worse than most expected in past 6 months. Some decision based on wrong analyzing at early this year intensified the crisis. Research showed a 20-30 per cent drop so far this year and estate agents report sales 30 per cent below asking prices.

Residential property, which quadrupled since 2000 to peak at almost $26,000 per square metre in prime locations last year, is also falling back to earth with a bump as Russia’s oil-fuelled economic boom has turned to bust.

Some rich guys may have to clean up other problems. Russia tax agent takes a series of investigation on property magnates after they fail to find financial sourcing. It is believed by most Russia people every property developer must be involved in business bribes for grabbing loan and lands, it seems this common view is popular in China either.

Banks, the direct “victims” ( beneficiary? Some Chinese guys insist the bullish thinking), have growing property portfolios as they have to take over buildings for unpaid debts.

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It is not just a number game; the over-heating market deeply hurt the real economy and makes it almost impossible to recover soon. China will copy all these? At least, currently, none dares to venture a “sell” to China market despite of a lofty valuation in the real estate and capital market.

China Financial Market

As the world struggles with the financial crisis and its repercussions on the global economy, questions inevitably arise as to what and who will drive the financial markets in future years. China is likely to be one of the key players, given its dynamic development.

China’s financial markets have enjoyed a period of strong growth since the early 1990s, even though they are still relatively small compared to those of industrial countries and some other emerging markets.

Regulatory bodies have followed a careful and gradual reform path and will most probably continue with this approach. Given the current turmoil in global financial markets and the experience of successful gradual reforms, this approach is likely to provide a good basis for sustainable development in the future.

It would be unrealistic to expect China to emerge unscathed from the global recession. The weaknesses of less financially sound banks will be exposed during the downturn. A strengthening of provisioning and the capital base will be needed in light of a potential rise in credit losses.