CHINA: ECONOMICS: Cooling Hot Money and Reigning in the Property Market
China's recent policy initiatives are very critical and should be regarded as such. The rally for RMB revaluation has been led by the US who stands to gain the most if the RMB revalues and destabilizes China's economy. China is taking the prudent route though and addressing those fundamental issues surrounding their prime directive, to grow the nation.
To that extent, while the market and many speculators may be banking on an RMB revaluation, it will not likely be the case for a while.
One key issues is: how to keep hot money from leaving China and at the same time bring housing prices to within rationale levels for its citizens.
China has been seeking to address the "property bubble" for some time now, but hasn't signaled the market in such a fashion that property prices start a slow easing.
The latest round of policy measures has the Chinese government showing more grit as the measures come fast on the tail of previous attempts. Look to see volumes remain stable over the coming months and average selling prices to hover. As prices normalize volumes will grow slightly while prices remain within acceptable bands, with speculators left holding the now cooled "hot" potato. (That was a horrible attempt at a pun, I know).
Keynote:
Judging from intial headlines in Shanghai newspapers, the media will probably overplay the policy changes. This should see a short-term pull in hot-money speculators, and offer a decent entry-point
To that extent, while the market and many speculators may be banking on an RMB revaluation, it will not likely be the case for a while.
One key issues is: how to keep hot money from leaving China and at the same time bring housing prices to within rationale levels for its citizens.
China has been seeking to address the "property bubble" for some time now, but hasn't signaled the market in such a fashion that property prices start a slow easing.
The latest round of policy measures has the Chinese government showing more grit as the measures come fast on the tail of previous attempts. Look to see volumes remain stable over the coming months and average selling prices to hover. As prices normalize volumes will grow slightly while prices remain within acceptable bands, with speculators left holding the now cooled "hot" potato. (That was a horrible attempt at a pun, I know).
Keynote:
Judging from intial headlines in Shanghai newspapers, the media will probably overplay the policy changes. This should see a short-term pull in hot-money speculators, and offer a decent entry-point
posted by howa at
5/17/2005
