1 THE CHINESE REAL ESTATE BUBBLE: IS IT AN OPPORTUNITY FOR SHORTS? Michael Wong and Peter Treadway.

Slides:



Advertisements
Similar presentations
The Economy 2010 and How We Got Here Steven L. Cobb, Ph.D. UNT Center for Economic Education.
Advertisements

1 Economic Summit 2012 Roadmap to Hong Kong Success Excessive Leverage: Root Cause of Financial Crisis Norman Chan Chief Executive of the Hong Kong Monetary.
Is the Recession Over? Daryl Montgomery August 2009 Copyright 2009, All Rights Reserved.
Financial Crises, Panics, and Macroeconomic Policy Economics is a science of thinking in terms of models joined to the art of choosing models which are.
1 A Review of new Regulatory Developments for Short Selling in Asia: Francois-Serge Lhabitant and Jeannine Daniel.
Short Selling the Real Estate Bubble in China
Kaiguo Zhou Sun Yat-sen University, Guangzhou, China Michael C S Wong City University of Hong Kong, Hong Kong, China The Impact of Short Selling on China.
Capital Markets Roundtable Historic Tax Credit Developers Conference Friday, February 6, 2009 Miami Beach, Florida.
Chinas Economy in the Post- Crisis World Carnegie Endowment for International Peace Washington DC, 17 March, 2010 Pieter Bottelier.
Commodities, inflation and finance: The risks of 21 st century stagflation Jayati Ghosh.
Financial convergence in Asia C.P. Chandrasekhar.
Lecture 1, Contemporary Issues Introduction to Moral Issues.
Julie Schicktanz Kami Sevier Ian Bray Vesa White Our Topic Is: The Consequences of Bank Mergers 8 December 2009.
Banking Crises Fin254f: Spring 2010 Lecture notes 2.2a Readings: Reinhart and Rogoff(10)
Research Department 1 Global Economic Crisis and the Israeli Economy Herzliya conference Dr. Karnit Flug Research Director, Bank of Israel February 2009.
Prospects for Financial Reform Huang Yiping Peking University January 7, 2013 New York Stock Exchange.
How did we get here? Speaker Names October Disclaimer Any statements contained herein that are not based on historical fact are forward-looking.
Saudi Arabia Business Optimism Index – Q Presented by Dun & Bradstreet National Commercial Bank.
School of the Built Environment Saving the banks at the expense of the property industry? Lessons from China J Albert Cao Department of Real Estate and.
1 MACRO-ECONOMIC DIMENSIONS OF THE GLOBAL FINANCIAL CRISIS Presentation to Economic Society of Singapore Pre-University Junior College Seminar Manu Bhaskaran.
Global Imbalances and Policy Frictions James Mirrlees Chinese University of Hong Kong European Colloquia Iseo, 14 September 2011.
Fiscal Policy Challenges and Global Equilibrium James Mirrlees Chinese University of Hong Kong Pioneer Colloquia Beijing, April 2013.
Key Points  Origins of the crisis  Thai Baht  Economy of S. Korea and Indonesia  The Chaebols  Beginning of the collapse  Seoul Stock Exchange 
The Asset Price Transmission Mechanism - The Affect Of The Federal Funds Rate On Asset Prices Elizabeth Gonzalez.
By: Peter Temin  “This history of the Great Depression…describes real and imagined causes of the depression, bank failures and deflation, the Fed.
The Great Recession Causes & Prospects
Times Series How do you view the increasing growth of house price in China? The Great Wall... is evidence of a historical inability.
Financial Crisis and Market Panic Keith Maskus October 27, 2008.
International Financial Crises What happened in Asia? Globalization, R. Bonoan & J. Shapiro November 21, 1999.
© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Chapter 23 Modern Monetary Policy and the Challenges Facing Central Bankers.
FEBRUARY Global economic growth: no decoupling (Real GDP, % change) World U.S Japan
Global Financial Crisis 1 Don Kopka, PhD Management Dept Towson University.
Student Name Student ID
Japanese Yen Will the yen appreciate or depreciate in the near future?? Source: Bank of Japan.
Chapter 1 Why Study Money, Banking, and Financial Markets?
Financial Crises Analysis. Overview Asian Financial Crisis July Mainly South East Asian Countries Started in Thailand 2008 Financial Crisis.
THE GREAT CONTRACTION : WHO CAUSED IT & HOW DID IT HAPPEN? By : Charlie Haumesser Discussants : Ashley Hucksoll & Mikael Leveille.
Global Imbalances and Global Financial Turmoils Dr. Sompop Manarungsan Faculty of Economics and Chinese Studies Center Chulalongkorn University Bangkok.
OFFSHORE MARKET OF ¥ UAN ¥ UAN IS ON THE WAY TO INTERNATIONALIZATION Presented By: Qian Gao Zahra Rezapour Lulu Dong.
THE TRASFORMER ASSOCIATION SPRING MEETING LESSONS FROM THE RECENT CRISIS AND CURRENCY MARKETS by Tassos Malliaris Loyola University Chicago May 12, 2010.
1 Chapter 2 Flow and Sources of Real Estate Funds.
13/10/ The International Monetary System II Dr. Antony Mueller.
Chapter 1 Why Study Money, Banking, and Financial Markets?
ASSET BUBBLES AND THE FINANCIAL CRISIS OF 2008? A. G. MALLIARIS Presented to the Xavier EMBA, November 26, 2008 What are Asset Bubbles? Variety of Bubbles.
The Fed and the Financial Crisis Jonathan Cotten Roger Kone Davorin Kuljasevic.
Response of the Reserve Bank of India (RBI) to the Financial and Economic Crisis Aleksandar Zaklan.
Copyright © 2006 Pearson Addison-Wesley. All rights reserved Introduction We saw how a single country can use monetary, fiscal, and exchange rate.
Causes of the Great Depression. Signs of economic trouble Uneven wealth – 1% of population controlled 34% of the wealth. Living on credit – Installment.
A Tour of the World Chapter 1. © 2013 Pearson Education, Inc. All rights reserved The Crisis Table 1-1 World Output Growth since 2000.
McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 23 Monetary Policy, Output, and Inflation in the Short.
Hong Kong Bond Market. Notes 1.Hong Kong “Government” Bonds are issued by Hong Kong Monetary Authority are known as Exchange Fund Bills & Notes. 2.Hong.
Why China should Still be Cautious in Capital Account Liberalization? Ming Zhang Institute of World Economics and Politics Chinese Academy of Social Science.
Property Rights Protection and Bank Loan Pricing Kee-Hong Bae Korea University Vidhan K. Goyal Hong Kong University of Science and Technology.
Business Cycles. Characteristics & Causes Business Cycles – Regular ups & downs of Real GDP Business Fluctuations – Rise & fall of Real GDP over time.
Chapter 1 Why Study Money, Banking, and Financial Markets?
Figure 8.3: Subprime Lending Fiasco – U.S. Housing Bubble U.S. Housing Bubble Unsustainably High House Prices Very Low Interest Rates Excessive Foreign.
Chapter 1 Why Study Money, Banking, and Financial Markets?
Copyright © 2010 Pearson Education. All rights reserved. Chapter 1 Why Study Money, Banking, and Financial Markets?
US FED Low Interest Rate Policy of Yonsei GSIS Lei, Yanghua.
Lecture 10 Thursday, February 16 Finance.
Lost Decade in Japan Lost Decade (失われた10年, Ushinawareta Jūnen)
The Global Financial Crisis
Asian Financial Crisis
Why Study Money, Banking, and Financial Markets?
——The Comparison Between China & Other Areas
The Lessons from the Housing Market Crisis
Financial System (part 2)
Over-Accumulation in Japan
© 2016 Pearson Education Ltd. All rights reserved.19-1© 2016 Pearson Education Ltd. All rights reserved.19-1 Chapter 1 Why Study Money, Banking, and Financial.
Presentation transcript:

1 THE CHINESE REAL ESTATE BUBBLE: IS IT AN OPPORTUNITY FOR SHORTS? Michael Wong and Peter Treadway

2 Reading Questions Is China undergoing a massive bubble in real estate similar to that of the US? How are the specifics of the China bubble different or similar to that of the US? Does the Minsky/Kindleberger debt deflation model apply to China? Has the stock market already anticipated the bursting of the bubble? Does the stock market have further declines ahead due to problems in Chinese real estate?

3 The Case-Shiller index US house prices began their upward March in 1998 peaked in 2006.

4 The Bubble in China Rate of real estate price increase accelerated into 2008 and then fell off dramatically Global financial crisis in 2008 interrupted Chinese real estate price acceleration In 2009, real estate price acceleration resumed

5 The Bubble in China

6 The Minsky/Kindleberger Debt Deflation Model Massive increase in real estate prices financed by bank debt Something (government action?) pops bubble Real estate prices decline, borrowers in distress, banks face loan problems and insolvency

Minsky/Kindleberger in China? Statistics on bank real estate lending hard to come by Bank loans increased by 31% in 2009 Major lending to local government entities which probably went into real estate Major acceleration in real estate prices 7

8 Minsky/Kindleberger in China? (cont) Where is China on the Minsky/Kindleberger models timeline? Have the authorities restrictive actions come in time? Or are they the straw that is breaking the bubbles back?

9 The Stock Market Prices for bank and real estate stocks have been declining since November 2009 Price action on the Shanghai and Shenzhen markets for banks and real estate companies since November 2009 CSI 300 Banks Index (down 28%) CSI Real Estate Index (down 42%) Similar declines for Chinese bank and real estate stocks on Hong Kong exchange.

Is It Too Late to Short Chinese Banks and Property Stocks? Probably not. Problem is more serious than markets have anticipated Expectations for Chinese banks need for more capital, rising non-performers and possible government bailout reasonable. 10

11 Conclusion Real estate price acceleration and surge in bank lending in 2009 suggest bubble has formed in Chinese real estate. Minsky/Kindleberger debt deflation model relevant to China. Ultimate cause of bubble negative real interest rates, excessively expansive monetary policy and failure to revalue renminbi against dollar in 2009 First down leg of declines in Chinese property and bank stock prices is over Odds favor a second downleg. Still opportunity for shorts

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2024 SlidePlayer.com Inc. All rights reserved.