According to the Business Times, subsales of the properties last year after being bought from developers in the same year indicates a steep drop in the volumes but not the price levels suggesting that speculators are holding on for higher prices. The number of subsales dropped by 66.7%, 69.1% and 39.1% in the high end, mid tier and mass market segments respectively in 4Q07. However, the average gains made from subsales over the developer sales in 4Q07 were steady at 34% in high end (vs full year gains of 20%), 21% in mid tier ( vs full year gains of 23%) and 17% in mass market segment (vs full year gains of 16%).
We think that speculators are having a hard time to offload their properties as there are no takers. The buyers are adopting a cautious wait and watch approach resulting in a steep drop in the sales volumes. Channel checks indicate that there are cases where speculators have dropped their price expectations by 15-20% in the high end segment and yet the buyers are not purchasing. We maintain our cautious outlook for the Singapore residential property segment especially the high end and mid tier segment. We expect the correction to be proportional to the level of subsales as a percentage of overall sales which averages to around 21.5% for the high end, 13% for the mid tier and 5.5% in the mass market in the previous two quarters.
Best Regards Vikrant Pandey Investment Analyst UOB Kay Hian Research
Exposure to subprime debt limited By Fu Jing (China Daily)
The impact of the US subprime crisis on Chinese banks will be limited and their bottom line will not be significantly affected, the central bank governor said yesterday.
But Zhou Xiaochuan warned that vigilance was necessary as many uncertainties still exist about how the debt crisis will unfold and what impact it will have on China, which faces mounting inflationary pressure.
"There will be further indirect impact from the US subprime mortgage crisis on China's economy. It cannot be underestimated since what lies ahead is far beyond our experience," he told a press conference on the sidelines of the annual session of the National People's Congress, the top legislature.
A recent report in Capital Week magazine said six of China's major commercial banks had lost around 4.9 billion yuan ($686 million) in the US subprime market, which accounted for around 1 percent of the total profit they made in 2007.
Talking about the relationship between currency value and inflation, Zhou said a faster appreciation of the yuan may help control prices, but cannot be the predominant means of curbing inflation. Some economists have suggested that a faster appreciation of the yuan could help cut the trade surplus, which is believed to be the main reason for the current excessive liquidity that is driving up prices. A stronger yuan would make exports more expensive in foreign currency terms.
The exchange rate is decided more by market forces, Zhou explained.
China has made its currency regime more flexible by letting the yuan appreciate steadily. The currency has risen about 12 percent since July 2005, when it was unpegged from the greenback.
Inflation control is mainly dependent on government policies, including a tight monetary stance, he said.
Premier Wen Jiabao mentioned nine measures to ensure effective supply and curb excessive demand as ways to stabilize prices in his Government Work Report, which was delivered at the start of the NPC annual session on Wednesday, he pointed out.
Last year, the central bank raised the reserve ratio 10 times and interest rates six times to mop up excess liquidity.
The reserve ratio has so far been raised once this year; and economists expect further interest rate hikes.
Zhou said there is room for an interest rate increase, but domestic and international factors need to be taken into account.
He said the recent fall of US interest rates did affect China, but only partially. "China has many domestic factors to consider in interest rate revisions."
Zhou cited the influence of the domestic capital market and consumption, as the country is increasingly dependent on stimulating domestic demand, rather than exports, to spur economic growth.
Successive interest rate cuts by the US Federal Reserve to rev up the economy have widened the China-US interest rate spread and helped push down the US currency.
Some analysts said the central bank now had limited room to raise rates further and had to let the yuan rise to curb inflation.
The long-awaited second board market is likely to be launched within two months - and for capital-hungry start-ups and high-growth firms, it can't come sooner.
Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), said at the annual NPC and CPPCC sessions that the regulator will collect public comment on the second board market's management in April, right after the two sessions, signaling its launch is imminent.
"We have prepared for the second board market and expect to launch it as soon as possible," said Shang, declining to reveal more details.
"It's the right time to set up a second board," said Zhu Wuxiang, a professor at Tsinghua University's School of Economics and Management. "The development of China's economy, the growing stock market, policies to encourage innovative SMEs and the rising investment passion for stocks and funds all point to a second board."
The CSRC says regulations on the second board market are likely to be released for public opinion in April.
Similar to the NASDAQ's growth enterprise board, the nation's second board market will help small start-ups, especially high-growth and hi-tech firms, to raise funds.
The second board in the US allows SMEs to break the dominance of heavyweight companies and helps them to expedite growth. The US second board market reduced the time frame for establishment to IPO from seven years in the 1980s to five years in the 1990s.
A second board is also seen as an important part of the multi-level capital market system in China.
"It will help soak up excess liquidity and stimulate development of private equity," Cheng Siwei, vice-chairman of the Standing Committee of the National People's Congress, said.
But while the second board is likely to bring many opportunities, the risks for investors should not be overlooked.
It will be survival of the fittest on the second board, with only the few top performing high-growth companies likely to lure the venture investment they need.
With a lower listing threshold, the quality of the board's companies will vary and speculation is likely for "high-growth" firms.
Stock prices are expected to fluctuate as companies manage and leverage venture capital.
"The uncertainty and risk is really high, but there is no need for fear. The key point is to design effective principles and mechanisms to reduce risk," Zhu said.
Four areas need to be tackled, according to Zhu.
First, high standards should be set for the listed companies' competition status and growth capacity.
Second, a lower listing threshold doesn't mean lower requirements - companies should have strong growth potential, high efficiency and value.
Third, the listed companies should have strict corporate governance and internal controls.
And the role of the media, investment banks, legal and accounting firms should be enhanced, Zhu said.
"We can't just copy overseas countries' standards without profit requirements for listing, or copy the SME board standards with a three-year profit requirement," Liu Jipeng, a professor at the China University of Political Science and Law, said.
The new second board market's threshold for listed companies has been lowered, with a minimum requirement for net profit of more than 20 million yuan for two consecutive years and 10 million yuan for the latest year. But it still needs regulatory approval.
"Risk recognition and precautions will be a crucial part of the second board. The CSRC wants to enhance risk prevention in areas including market access, continuous supervision, a de-listing system, trading system and investor education," a CSRC source said.
Qualitative indices will be created to supervise issuers' honesty, management and shareholders, the source said.
The number of companies to be listed is also up for debate - the second board needs enough competitive firms listed to make it active and efficient.
"The scale of the second board should be large enough. The number of listed companies could be 500 in one year - but 300 at least," Liu Jipeng said.
Liu said it would not be difficult to find 100 companies that have made a profit for over a year to issue more than 20 million shares in one province.
"Company resources for the second board are abundant. There are already 50,000 SMEs nationwide that are qualified to list," Liu Hongru, the first chairman of the CSRC, said.
"To avoid speculation, the number of companies listed in the first batch should be small, maybe 50 to 80," said an investment banker who did not wish to be named.
Some analysts said the size of the first batch of companies to list on the second board will depend on the market climate. They said it would be wise for a large number of companies to debut in a bull market; but a bear market would see a more gradual approach.
"The second board market will help to solve SMEs' financial problems, but that's not enough. More financial products should be made available," Li Yang, head of the Chinese Academy of Social Sciences' financial institute, said.
4 comments:
According to the Business Times, subsales of the properties last year after being bought from developers in the same year indicates a steep drop in the volumes but not the price levels suggesting that speculators are holding on for higher prices. The number of subsales dropped by 66.7%, 69.1% and 39.1% in the high end, mid tier and mass market segments respectively in 4Q07. However, the average gains made from subsales over the developer sales in 4Q07 were steady at 34% in high end (vs full year gains of 20%), 21% in mid tier ( vs full year gains of 23%) and 17% in mass market segment (vs full year gains of 16%).
We think that speculators are having a hard time to offload their properties as there are no takers. The buyers are adopting a cautious wait and watch approach resulting in a steep drop in the sales volumes. Channel checks indicate that there are cases where speculators have dropped their price expectations by 15-20% in the high end segment and yet the buyers are not purchasing. We maintain our cautious outlook for the Singapore residential property segment especially the high end and mid tier segment. We expect the correction to be proportional to the level of subsales as a percentage of overall sales which averages to around 21.5% for the high end, 13% for the mid tier and 5.5% in the mass market in the previous two quarters.
Best Regards
Vikrant Pandey
Investment Analyst
UOB Kay Hian Research
Speculators holding out for higher prices by BT
Exposure to subprime debt limited
By Fu Jing (China Daily)
The impact of the US subprime crisis on Chinese banks will be limited and their bottom line will not be significantly affected, the central bank governor said yesterday.
But Zhou Xiaochuan warned that vigilance was necessary as many uncertainties still exist about how the debt crisis will unfold and what impact it will have on China, which faces mounting inflationary pressure.
"There will be further indirect impact from the US subprime mortgage crisis on China's economy. It cannot be underestimated since what lies ahead is far beyond our experience," he told a press conference on the sidelines of the annual session of the National People's Congress, the top legislature.
A recent report in Capital Week magazine said six of China's major commercial banks had lost around 4.9 billion yuan ($686 million) in the US subprime market, which accounted for around 1 percent of the total profit they made in 2007.
Talking about the relationship between currency value and inflation, Zhou said a faster appreciation of the yuan may help control prices, but cannot be the predominant means of curbing inflation.
Some economists have suggested that a faster appreciation of the yuan could help cut the trade surplus, which is believed to be the main reason for the current excessive liquidity that is driving up prices. A stronger yuan would make exports more expensive in foreign currency terms.
The exchange rate is decided more by market forces, Zhou explained.
China has made its currency regime more flexible by letting the yuan appreciate steadily. The currency has risen about 12 percent since July 2005, when it was unpegged from the greenback.
Inflation control is mainly dependent on government policies, including a tight monetary stance, he said.
Premier Wen Jiabao mentioned nine measures to ensure effective supply and curb excessive demand as ways to stabilize prices in his Government Work Report, which was delivered at the start of the NPC annual session on Wednesday, he pointed out.
Last year, the central bank raised the reserve ratio 10 times and interest rates six times to mop up excess liquidity.
The reserve ratio has so far been raised once this year; and economists expect further interest rate hikes.
Zhou said there is room for an interest rate increase, but domestic and international factors need to be taken into account.
He said the recent fall of US interest rates did affect China, but only partially. "China has many domestic factors to consider in interest rate revisions."
Zhou cited the influence of the domestic capital market and consumption, as the country is increasingly dependent on stimulating domestic demand, rather than exports, to spur economic growth.
Successive interest rate cuts by the US Federal Reserve to rev up the economy have widened the China-US interest rate spread and helped push down the US currency.
Some analysts said the central bank now had limited room to raise rates further and had to let the yuan rise to curb inflation.
Home>>China >> China Business
'Right time' to launch second board market
The long-awaited second board market is likely to be launched within two months - and for capital-hungry start-ups and high-growth firms, it can't come sooner.
Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), said at the annual NPC and CPPCC sessions that the regulator will collect public comment on the second board market's management in April, right after the two sessions, signaling its launch is imminent.
"We have prepared for the second board market and expect to launch it as soon as possible," said Shang, declining to reveal more details.
"It's the right time to set up a second board," said Zhu Wuxiang, a professor at Tsinghua University's School of Economics and Management. "The development of China's economy, the growing stock market, policies to encourage innovative SMEs and the rising investment passion for stocks and funds all point to a second board."
The CSRC says regulations on the second board market are likely to be released for public opinion in April.
Similar to the NASDAQ's growth enterprise board, the nation's second board market will help small start-ups, especially high-growth and hi-tech firms, to raise funds.
The second board in the US allows SMEs to break the dominance of heavyweight companies and helps them to expedite growth. The US second board market reduced the time frame for establishment to IPO from seven years in the 1980s to five years in the 1990s.
A second board is also seen as an important part of the multi-level capital market system in China.
"It will help soak up excess liquidity and stimulate development of private equity," Cheng Siwei, vice-chairman of the Standing Committee of the National People's Congress, said.
But while the second board is likely to bring many opportunities, the risks for investors should not be overlooked.
It will be survival of the fittest on the second board, with only the few top performing high-growth companies likely to lure the venture investment they need.
With a lower listing threshold, the quality of the board's companies will vary and speculation is likely for "high-growth" firms.
Stock prices are expected to fluctuate as companies manage and leverage venture capital.
"The uncertainty and risk is really high, but there is no need for fear. The key point is to design effective principles and mechanisms to reduce risk," Zhu said.
Four areas need to be tackled, according to Zhu.
First, high standards should be set for the listed companies' competition status and growth capacity.
Second, a lower listing threshold doesn't mean lower requirements - companies should have strong growth potential, high efficiency and value.
Third, the listed companies should have strict corporate governance and internal controls.
And the role of the media, investment banks, legal and accounting firms should be enhanced, Zhu said.
"We can't just copy overseas countries' standards without profit requirements for listing, or copy the SME board standards with a three-year profit requirement," Liu Jipeng, a professor at the China University of Political Science and Law, said.
The new second board market's threshold for listed companies has been lowered, with a minimum requirement for net profit of more than 20 million yuan for two consecutive years and 10 million yuan for the latest year. But it still needs regulatory approval.
"Risk recognition and precautions will be a crucial part of the second board. The CSRC wants to enhance risk prevention in areas including market access, continuous supervision, a de-listing system, trading system and investor education," a CSRC source said.
Qualitative indices will be created to supervise issuers' honesty, management and shareholders, the source said.
The number of companies to be listed is also up for debate - the second board needs enough competitive firms listed to make it active and efficient.
"The scale of the second board should be large enough. The number of listed companies could be 500 in one year - but 300 at least," Liu Jipeng said.
Liu said it would not be difficult to find 100 companies that have made a profit for over a year to issue more than 20 million shares in one province.
"Company resources for the second board are abundant. There are already 50,000 SMEs nationwide that are qualified to list," Liu Hongru, the first chairman of the CSRC, said.
"To avoid speculation, the number of companies listed in the first batch should be small, maybe 50 to 80," said an investment banker who did not wish to be named.
Some analysts said the size of the first batch of companies to list on the second board will depend on the market climate. They said it would be wise for a large number of companies to debut in a bull market; but a bear market would see a more gradual approach.
"The second board market will help to solve SMEs' financial problems, but that's not enough. More financial products should be made available," Li Yang, head of the Chinese Academy of Social Sciences' financial institute, said.
Source:China Daily
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