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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
It really seems to be a case of who you want to believe.
The highly opinionated investor Jim Rogers waded into the debate over Hong Kong’s sizzling property prices to warn on Tuesday that values in Shanghai and Hong Kong may fall after being driven higher by speculative demand.
Then on Wednesday, Li Ka-shing, one of Asia’s richest men — or rather, Li’s construction company Cheung Kong — insisted there was no such bubble, even though Hong Kong real estate prices saw the biggest increase among top housing markets last year.
Not only that, but the latest figures, issued Tuesday, show that full-year property sales in China zoomed by 75.5 per cent from a year ago to Rmb4,399.5bn ($644bn), with residential sales jumping a whopping 80 per cent, according to the National Bureau of Statistics.
Sounds fairly bubbly to us, particularly considering that Chinese home prices rose nearly 8 per cent in December alone, the fastest growth in 18 months, despite new attempts by Beijing to cool speculative zeal.
As the FT notes, developers have repeatedly warned of a real estate bubble, while analysts and officials are now talking about the serious impact on the financial system when prices begin to fall.
But in the view of Cheung Kong’s executive director Justin Chiu, there is nothing to get excited about. “I don’t really see a bubble,” Chiu told Bloomberg. “There shouldn’t be too much concern about the governments trying to crush the market.”
The territory’s luxury home prices may rise as much as 15 per cent this year, and there are no bubbles in the city’s and China’s property markets, he noted.
But perhaps rather than listen to Cheung Kong’s predictions, some investors would prefer to look at developments such as the one highlighted in Bloomberg report last week, on how China’s best-performing stock funds are turning bearish on housing shares.
Meanwhile, another heavyweight China hand, Fred Hu, Goldman Sachs’ chairman for Greater China entered the debate, warning this week that real estate prices in China, Singapore and Hong Kong need monitoring for signs of bubbles forming amid rapid growth.
And not to be excluded, emerging markets-booster Mark Mobius of Templeton Asset Management put in his renminbi’s worth, insisting earlier this month that China’s property market is not about to burst.
“The Chinese will act rationally and they’re not going to kill the market,” he said.
Well, don’t hold a knife over it, Mark….
Related links:
China, asset bubbles and Jim Rogers – TheMessthatGreenspanMade
Uh-oh, now Jim Rogers is warning about China’s property bubble – Clusterstock
China’s liquid real-estate bubble – FT Alphaville
China: The heat is on – FT Alphaville