China Property Market

Li Ka Shing denies quitting on China, HK

Li Xueying

The Straits Times

Sunday, Dec 01, 2013

ASIA'S richest man Li Ka Shing is fighting back against criticism that he is pulling his assets out of Hong Kong and mainland China, saying that such talk amounts to "a big joke".

In a rare, wide-ranging interview that analysts surmise is aimed at protecting his legacy, the 85-year-old defended his decisions to sell key assets as "normal" in the course of business, while emphasising that he is a patriot whose dream is for China to be always strong and prosperous.

"I dislike being maligned," he told journalists from the Guangzhou-based Nanfang media group in an interview published yesterday. "This rumour about me pulling my assets out has been circulating for a few months. Today, I'm striking back."...............................................

It is also absurd to say that selling ParknShop was tantamount to pulling out of Hong Kong, he added. "Selling high and buying low is normal business behaviour. This is the first time I've heard comments about me pulling out assets from Hong Kong... and that has spread to the mainland too."

He expressed annoyance at such rumours, citing how in Singapore, where he has "a very good relationship with the Government", his conglomerate had sold assets worth billions of dollars. It also had not bought sites because of high land prices.

"But we have never heard any criticisms about 'pulling out assets' from Singapore." ........................................................

Having said all that, Chinese government will keep everything looking good since they don't want social problems... afterall they have had ghost towns for long time...

In a capitalist planned economy, they have to ensure that obscene profits will be tempered in order to ensure social harmony... in which way, someone will pay... how dunno and dun want to know...

Just want to focus on the easy and less risky money... basic infrastructure and essential goods...


GG

The media or news out there are usually quite "manipulated".
If rich people want to pull out their money from some assets, why would they announce to the whole world when they can do it quietly behind the scene (i.e. sell at good prices to those retail players who are still "ignorant")...

The world is not so "easy" and "simple".... (IMHO)...

(24-08-2014, 09:03 PM)Boon Wrote: Li Ka Shing denies quitting on China, HK

Li Xueying

The Straits Times

Sunday, Dec 01, 2013

ASIA'S richest man Li Ka Shing is fighting back against criticism that he is pulling his assets out of Hong Kong and mainland China, saying that such talk amounts to "a big joke".

In a rare, wide-ranging interview that analysts surmise is aimed at protecting his legacy, the 85-year-old defended his decisions to sell key assets as "normal" in the course of business, while emphasising that he is a patriot whose dream is for China to be always strong and prosperous.

"I dislike being maligned," he told journalists from the Guangzhou-based Nanfang media group in an interview published yesterday. "This rumour about me pulling my assets out has been circulating for a few months. Today, I'm striking back."...............................................

It is also absurd to say that selling ParknShop was tantamount to pulling out of Hong Kong, he added. "Selling high and buying low is normal business behaviour. This is the first time I've heard comments about me pulling out assets from Hong Kong... and that has spread to the mainland too."

He expressed annoyance at such rumours, citing how in Singapore, where he has "a very good relationship with the Government", his conglomerate had sold assets worth billions of dollars. It also had not bought sites because of high land prices.

"But we have never heard any criticisms about 'pulling out assets' from Singapore." ........................................................

So if Shanghai ICP is sold, it would be the fifth property divested by superman.

Nanjing IFC and Shanghai ICP were owned by ADF 1.
ADF 1 is managed by ARA.
LKS has a stake in ARA.

No doubt, ARA had to put some seed money in ADF 1 - but the ownership of LKS in these two buildings are small.

Even if it is counted as 5 - he still has plenty of China assets.
http://www.valuebuddies.com/thread-4980-page-2.html
________________________________________________________________________________________________________________

Li Ka-shing Said to Sell Shanghai Office Tower for RMB 1.54B

2014/08/11 by Michael Cole

http://www.mingtiandi.com/real-estate/fi...rmb-1-54b/

As I've been pointing out the obvious (obvious because any rational observer can conclude, nothing prophetic) that there was/ is a real estate bubble in Hong Kong, China, Singapore, Australia, UK, etc. The only difference is what the government is doing about it. In particular I am concerned about UK and Australia as per our discussion here:
http://www.valuebuddies.com/thread-3823-...l#pid90180

Everybody knows there is a bubble but everybody have to choose if they want to take their chances on when it will pop. LKS is a very rational and shrewd investor. His actions already affirm the trail of the bubble. My past observation is that we need to watch what he do rather than what he say due to his own vested interest. That said, he already gave a clue when he said normal business of "selling high". Like Buffett these guys dont aim to sell at the top or buy at bottom, and are usually 6 months or so early.

As for Temasek, people also forgot what it lost in GFC on the western banks is about the same as what it gained in the chinese banks prior. How it stabilised DBS, Capitaland and trusts, Olam etc during crisis. IMHO I dont think its return is impressive but it's not shabby either.

The larger property developers are still doing well. Only the smaller developers are suffering in China...

China's largest property developer says H1 profit up 34.4% y-o-y
25 Aug 2014 08:07
[SHANGHAI] China State Construction Engineering Corp Ltd (CSCEC), the country's largest real estate conglomerate, posted first-half net profit of 11.8 billion yuan (US$1.92 billion), up 34.4 per cent from a year earlier.

Operating income hit 374.9 billion yuan, an on-year increase of 24.2 per cent, according to a filing posted on the Shanghai Stock Exchange on Sunday.
...
Source: Business Times Breaking News

Lock in sales being recognised lah...

(25-08-2014, 09:51 AM)CityFarmer Wrote: The larger property developers are still doing well. Only the smaller developers are suffering in China...

China's largest property developer says H1 profit up 34.4% y-o-y
25 Aug 2014 08:07
[SHANGHAI] China State Construction Engineering Corp Ltd (CSCEC), the country's largest real estate conglomerate, posted first-half net profit of 11.8 billion yuan (US$1.92 billion), up 34.4 per cent from a year earlier.

Operating income hit 374.9 billion yuan, an on-year increase of 24.2 per cent, according to a filing posted on the Shanghai Stock Exchange on Sunday.
...
Source: Business Times Breaking News

Property developer China Vanke’s smart, not desperate, online move

Residential property developer China Vanke is to offer discounts matching users’ online spend on Taobao, Alibaba’s ecommerce website, over the past year.  Photo: Bloomberg

It was inevitable: the Chinese real estate market has reached the frequent-flyer mile stage. Residential property developer China Vanke is to offer discounts matching users’ online spending on Taobao, Alibaba’s e-commerce website, over the past year. The reductions run from $US9000 ($6820) to $US350,000 on 23 projects in 12 cities.

Is this another sign that an overbuilt, overpriced, overleveraged Chinese property sector is wobbling towards collapse? Not necessarily.

Vanke is one of China’s most successful high-volume, low-margin residential developers. Even as the overall sector has struggled this year, the company’s contract sales rose nearly one-fifth between January and July. And inventories, at just over 5 per cent, were stable versus the end of 2013. It is not hugely indebted. Vanke does not look squeezed. So why might it engage in such a strategy?

In 2013, China’s internet economy – all internet-related expenditure from etail to infrastructure to broadband bills – as a percentage of GDP was 4.4, according to a report by McKinsey. This proportion has risen one-quarter over three years and is larger than in the US, France and Germany.

Last year the 632 million Chinese with internet access spent $US295 billion online, overtaking the $US270 billion spent by the 277 million American internet users. And, according to the China Internet Network Information Centre, fewer than half of Chinese netizens shop online. The e-tail market can only grow, and Alibaba dominates it. So Vanke’s move to lift its profile on a platform already used to sell property directly to the consumer seems more smart than desperate.

The costs may not even be as great as they seem. The small print suggests each development can impose limits to the discount, reducing the amount consumers can claim. And direct sales through Taobao could be a means to avoid paying commission to sales agents, further mitigating the expense.

A competitive market demands innovation. Vanke may just be moving into the digital era.

Financial Times

RBA monitoring Chinese property market
SEPTEMBER 03, 2014 2:30PM

Mitchell Neems

Business Spectator Reporter
Melbourne
Reserve Bank of Australia governor Glenn Stevens has warned Australia is not alone in its reliance on the Chinese economy and flagged the importance of the Chinese property market in the near-term, while also issuing a stark warning about the local real estate sector.

In a speech to a Committee for the Economic Development of Australia function in Adelaide, Mr Stevens said the full ramifications of the continuing rise in the weight of China's economy and, eventually, its financial system in world affairs will be a long-term focus, noting that nearly 50 countries now count China as either their first or second trading partner.

READ: Population growth can't fuel the economy forever

"In short, the whole world is now more dependent on China than it was," he said.

However, he said the immediate focus in the near-term was the Chinese authorities' attempts to manage the desired slowing in credit growth and moderation in asset values.

"Housing prices are falling in many Chinese cities at present," he said.

"This is not unprecedented – it is the third time in the past decade this has occurred."

Mr Stevens said the asset price and credit nexus was the area to watch, rather than monthly export numbers out of China or its long list of reads on manufacturing.

In a wry wink to the ongoing speculation about whether a property bubble exists in the Australian market, Mr Stevens remarked "Yes, house prices can fall, even in China."

But Mr Stevens went further in discussing the sector, warning against excessive risk-taking in the housing market while interest rates are low.

The RBA is aware that monetary policy works by affecting financial risk-taking behaviour, and does not want to foster too much of a build-up of risk, he said.

"That could leave the economy exposed to nasty shocks in the future.

"The more prudent approach is to try to avoid, so far as we can, that particular boom-bust cycle.

"It is stating the obvious that at present, while we may desire to see a faster reduction in the rate of unemployment, further inflating an already elevated level of housing prices seems an unwise route to try to achieve that."

Low interest rates can make funding easier to find, and smooth the way to expansion of credit, but it can't add to the supply of land and houses, or improve the responsiveness of the construction sector to demand for new housing, he said.

"Other policies have to do that - and it's important that they do if we are to see easy credit resulting in more dwellings as opposed to just higher prices for the existing dwellings."

Monetary policy could also not ensure policies for creating necessary infrastructure or generating the technological change and innovation necessary for the wellbeing of the country's citizens, Mr Stevens said.

"Other policy areas have to be right - and then the innovators and their backers have to be willing take the necessary risk," he said.

Fears mount over Chinese developers’ debt troubles

489 words
1 Sep 2014
The Irish Times
IRTI
English
© 2014, The Irish Times.

In a situation eerily reminiscent of the perfect storm that engulfed Irish property developers at the end of the boom, fears are growing over the astronomical debt exposure of developers in China, the world's second-largest economy, where house sales and prices are falling rapidly.

Cash-strapped Chinese developers are borrowing a record amount in the offshore loan market this year, adding to the highest debt loads since 2005. Homebuilders in the world's most populous economy got $5.9 billion (€4.5 billion) from foreign banks, up 39 per cent on the same period last year, according to data compiled by Bloomberg.

Builder debt has soared to 128 per cent of equity, the highest since 2005, according to a gauge of 84 companies. New home prices fell in July in almost all cities the government tracks and developers are missing sales targets.

"Higher leverage on the balance sheet will give developers a higher financial burden," said Agnes Wong, credit strategist at Nomura Holdings Inc in Hong Kong. "That means that if presales are not going as quick as they expect it can translate into trouble more easily than before."

Premier Li Keqiang is allowing builders to expand financing channels in a bid to stem the slowdown in an economy that derived 16 per cent of its growth from property development last year, according to the World Bank.

China's home sales fell 10.5 per cent in the first seven months of the year compared to the same period in 2013 to 3 trillion yuan (€371 billion), Moody's Investors Service said in an August 29th report. New construction declined 20 per cent across the country, according to another report from Fitch Ratings.

Pressure on real estate companies was underscored by the collapse in March of Zhejiang Xingrun Real Estate. Developers including China Vanke, the nation's biggest, and Greentown China Holdings, the largest in the eastern province of Zhejiang, have cut prices since then to boost sales.

Slow growth

The slump comes as economic growth is set to cool to 7.4 per cent this year, the slowest in more than two decades, according to the median estimate of economists surveyed by Bloomberg.

Standard and Poor's has reduced ratings for six Chinese property companies and increased them for two this year. That compares with two upgrades and two downgrades last year.

Lenders in Asia are extending more credit to high-yield companies as they seek to increase returns as central banks in the US, Europe and Japan keep benchmark interest rates near zero.

Property sales may improve this year, helped by a rise in mortgage lending and selective loosening of purchases restrictions, Moody's said in its August 29th report. The rise in loan funding is cause for concern because it reduces the claims that global bond investors have on the assets of Chinese developers, Wong said.


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