2015-04-17

Robots Will Replace Hookers in China

Once the sexbots hit the market, prostitutes will be in trouble.

Like millions in China who leave their hometowns to work in the cities, the 29-year-old car designer leads a bachelor’s life during the week, returning to his wife and toddler in neighbouring Hebei province every weekend.

Liu has been married for more than a decade, and does not want to be unfaithful, but still needs to satisfy his sexual appetites.

“Honestly, it is very easy to just pay a little money to find a woman in China, but I simply cannot bring myself to cheat on my wife, so I have never considered it,” he said with a nervous laugh.

But a blow-up alternative was not an option. “There was no way I would have sex with that kind of cheap inflatable plastic,” he explained.

Instead he forked out 15,800 yuan (HK$20,000), almost a month’s pay, for his more realistic Chinese-made “156”.

“The only way a doll is better than a woman is that it won’t resist, so people can do whatever they want with it,” he added.

...“If a married man refuses to see prostitutes and uses a doll instead, isn’t it admirable?”

...“A doll’s perfection is derived from mathematical calculations, but it will never be more beautiful than a woman because she has a soul, expresses emotions and shows reaction.

“To me it has absolutely nothing that’s better than a real woman, but I can at least try to deceive myself with it,” he said.

'It's better than cheating on my wife': Sex dolls fulfil the needs of China's lonely men

Overseas Homes and Equities Attract Investors, Chinese Home Price May Track GDP At Best

Another article, this time from China Finance Online (CNFOL), argues that price increases will fade in the coming weeks. Developers remain skeptical of a major rebound, with many seeing govt intervention as helpful, but unable to reverse a market that has, in their view, permanently shifted.

From the large market environment, the current property market landscape has changed dramatically. Yu Liang, president of Vanke Group by the end of March in the earnings call, said the property market, the central government introduced policies to boost the market will indeed play an important role, but the policy itself does not change the entire industry, from the "Golden Age" to the "Silver Age" change trend. "Silver Age" of the property, the property market supply and demand structure reversal from the previous shortage becomes localized oversupply, prices lost ground rapidly rising.

And according to the current market circumstances, in addition to a few cities, housing prices in most regions are impossible because of the introduction of the policy stimulus and rising. Eastern Region director of research at Jones Lang LaSalle Zhifeng Zhou pointed out that after the New Deal, the probability of large price tier cities, three, four-tier cities excess supply, high inventories, weak demand situation is difficult to change in the short term, they will not have rising price conditions.

...Based on the above analysis, we believe that prices rebound, just a normal reaction to a weak market, once the policy effect is digested by the market, the market will establish a new equilibrium. We expect that the market will be the extent of trading activity has improved in a few areas such as population import city, because of the substantial increase in demand and prices rose slightly, the rate of increase of about 7%, with the country's economic growth is similar. Some cities, such as supply and demand imbalance, Ningbo, Wenzhou, Dalian, prices rose difficult.

For buyers, do not have to because the individual real estate price and disrupted their purchase plans. At this stage, the market is relatively abundant supply, even if the encounter has a price of real estate, buyers can buy similar properties to replace, rather than panic buying

iFeng: 楼市一大信号证明房价不会大涨 背后原因曝光

A separate article says the developers willing to talk about rising prices have disappeared. At a recent trip to the Beijing Real Estate Expo, a reporter found developers are talking about everything except prices. In recent years, rising prices and the need to pre-order as the main sales point. Now, the sales people are talking about transportation, landscaping, facitilities, etc. Only one out of six agents tried to push investment and rising prices as a reason to buy.

Additionally, although public discussion focuses on rising prices, developers were actually willing to cut prices. In one case, a development in Zhouzhou, a city near Baoding in Hebei (about 1 to 1.5 hours away from Beijing) was selling for ¥7200 per sqm, up from ¥7,000 last year. However, agents said recent homes have sold for ¥7,000 and if you are willing to pre-buy, you can get a new home for ¥6000 per sqm.

The stock market is drawing away speculators:
"For now, the environment does not support price increases." Beijing Organizing Committee Secretary exhibitions Brings the case said, the better the real estate market compared to previous years, and now the country has launched a real estate registration system, to prepare for the real estate tax; On the other hand, a booming stock market, investment funds have more channels to choose from, the real estate investment is no longer a single product.

One area of growth is to convince Beijing city residents with expensive homes, to trade out to a large apartment or villa outside of the city:
"For first-tier city consumers, sell your old house for a big house, the time has come." Brings said, on the one hand, the new policy has been greatly reduced cost wards, on the other hand, in the foreseeable future, the first-tier cities especially housing hot spots will remain stable, not rose nor fell.

iFeng: 北京房展探“水温”:谁还相信房价会大涨?

Home buyers are more willing to buy overseas though: Why Chinese nationals are investing more in overseas properties
Compared with Europe, the cost of living and housing prices in the United States are relatively lower, thus leaving much larger room for appreciation. Because there are a large number of immigrants in the United States, it is easier for foreigners to assimilate into the culture.

Also, the quality of housing construction in America is high, and homeowners have permanent ownership.

In the United Kingdom, London is the primary city suitable for real estate investment, but some investors have complained that the weather in London is not very good and it is more difficult for foreigners to integrate into society.

The greatest attraction of real estate investment in Australia is that the country does not levy an inheritance tax.

The Beijing expo was "bursting" with overseas listings:
As in previous years, the biggest surprise of this year's overseas pavilions are also exhibitions, and a total of 30 countries, more than 140 overseas exhibitors, the conventional participating countries are the United States, Australia, New Zealand, Europe, France, Britain, Germany and Italy, Southern Europe Cyprus, Spain, Greece, etc. Moreover, this will also have a project in Taiwan exhibitors. Project types include luxury apartments, luxury villas, commercial real estate, land investment, the US EB-5 and so on.

China Daily: 北京房展海外楼盘爆棚

Coca-Cola Goes Green

Coca-Cola is going green, by buying China Green Group:
Coke to buy China multi-grain drinks maker for $400 million
Coca-Cola Co (KO.N) has agreed to buy the beverage business of China Culiangwang Beverages Holdings Ltd for $400.5 million (266.7 million pounds) including debt, to get a foothold in the fast growing multi-grain drinks category.

The deal marks Coke's first takeover in China since the country's antitrust regulator blocked its bid to buy local fruit juice maker Huiyuan in 2010.

Following the disposal of the beverage business, China Culiangwang will continue to develop its consumer products business, the company said in a stock exchange statement. The sale is subject approval from Chinese antitrust approvals.

Coke is paying a premium to China Culiangwang's market value of $230 million. The company's shares, which have more than doubled this year, were suspended ahead of the announcement. They will resume trading on Monday.
I wonder if Coke is buying now because it's afraid of rising prices. The stock has indeed doubled in the past year, but it has also doubled less than 2 months. If it rises to Coke's price, it will have quadrupled.

If you have been to China, you may have tried these types of drinks before. The Chinese website of of this particular company is here: 中国粗粮王饮品. I enjoyed a similar beverage made by a university in Hubei province. In terms of the marketing appeal, these types of drinks hit the green/health market and would probably also appeal to Westerners, but the flavors may need to be adjusted to appeal to Western tastes.

BTD: China Expands Short-Selling, Curbs Trust Financing of Equities

Here's your chance to jump into the hottest casino game on planet Earth.
China Futures Tumble on Trust Curbs, Expansion of Short Selling
FTSE China A50 Index futures for April delivery tumbled 5.2 percent in Singapore at 7:43 p.m. local time, while contracts on the Hang Seng China Enterprises Index lost 3.9 percent. Regulators banned the margin-trading businesses of brokerages from using so-called umbrella trusts and allowed fund managers to lend shares to short sellers, statements on Friday showed.

Investors have used umbrella trusts, which allow for more leverage than brokerage financing, to ramp up wagers on Chinese stocks after monetary stimulus sparked a world-beating rally in the nation's benchmark equity gauge. Permitting mutual funds to lend their holdings to short sellers would make it easier for bearish traders to bet on a retreat after the Shanghai Composite Index closed at a seven-year high on Friday.
These are good policies changes, but they will slow stocks for a day or two. China's regulators err on the side of caution and prudence when shifting regulations, a good thing nearly all of the time. When it comes to an emotionally driven bull market though, there's nothing that can stop it except a change in emotion.

If you're up for a wild trade and understand the risk, absolutely buy the dip——but use money that would otherwise go towards lottery tickets.

While short selling on the Shanghai bourse climbed more than threefold in the past nine months and reached a record 7.46 billion yuan last week, the amount still pales in comparison to China’s $7.3 trillion market capitalization. The CSRC said Friday it also expanded the number of stocks available for short selling to 1,100.
It'll be some time before the shorts are a factor in the market.

Chinese Trading Volume Could Dwarf the United States

In Volume Points to Growing Bull Market in China, we looked at the rising volume in China as a reason for an extended bull market. Trading volume is now regularly exceeding ¥1 trillion daily, which already puts it on par with U.S. markets.

ZeroHedge posted this chart comparing the current HK volume to the 2006-2007 bull run. Current volume in Shanghai already exceeds 2007 levels and the peak in 2015 already more than doubled the peak in 2007.

Developers Do Not Foresee Price Increases in Beijing

Contrary to the previous post, here's an article that states the industry insiders don't see price rises on the way, even in Beijing.

The industry generally believe that the changing nature of the property market has emerged, there is no basis for a large price increase.

According to the chain of home real estate market research statistics, in April (1-12 days) of commerical housing (excluding affordable housing) turnover was 1232 units, compared with the same period in March rose 35.5 percent, up 43.9 percent over last year. The average transaction price of 29,422 yuan / square meter, up 2.6%.

Chain of home real estate market research LI Qiao-ling that, under the new mortgage and fiscal stimulus policies, in April 2015 the market turnover was significantly better than the same period in 2014, but less than in 2013.
China Resources Land Qin Jiang, Assistant General Manager Marketing Management Department Beijing says that the reason for price increases before was expectations. Since prices were expected to rise, developers raised prices, investors followed them and then buyers followed. Now, the expectations have fundamentally changed. Also, most people already have homes, so raising prices doesn't cause people to move off the sidelines and buy a house, the way it might for someone without a home whose looking to buy.

iFeng: 京楼市涨价只闻声不亮剑 业内:房价难大涨

2015-04-16

Data Points to Pickup in Chinese Real Estate

and a rise in prices in Q2. The headline says the data shows a big change, with even third- and fourth-tier cities experiencing big increases in volume starting in late March.

The shift is in stark contrast to data only weeks earlier. The mood of the market then could be summed up by this Hong Kong listed developer: don't buy land, don't develop, or at least by very little land and develop very slowly.

Bifurcation remains the theme though. In Q1, the 20 largest listed companies made 60% of their land purchases in first-tier cities, an all-time high according to DTZ. While sales are up nationally, they're up much more in the first-tier cities. In April, Beijing, Shanghai, Guangzhou and Shenzhen are seeing year-on-year sales volume increase by 86%, 20%, 64% and 50%, respectively.

iFeng: 数据显示房地产正发生巨变 二季度市场或上行

Bargain Hunting Paid Off Thursday As Discounts Close

Spreads closed today as the 69 shared below climbed 2.91% on Thursday, beating the 1.72% increase in the Hang Seng China Enterprises Index.

Largest H/A-Share Discounts as of 2015-04-16

The Stock Market Hockey Stick Save of GDP

Bankers to China's Rescue
A more granular look at China's slowdown shows its stock market boom and increasing sophistication in financial services helped save the economy's bacon last quarter.
Financial intermediation surged 15.9 percent from a year earlier, the standout performer among the nine industry groups including real estate, transport and farming outlined by the statistics bureau. Construction and 'others' were the only other two to beat the economy's 7 percent expansion pace.

Guangdong Power Reform Success

It's not exactly the low hanging fruit, but it is fruit.

Caixin: Shenzhen Businesses Set to Save Money on Electricity Bills, Gov't Says
Guangdong's development and reform commission said businesses in Shenzhen will see price cuts of an average of 0.0843 yuan for every kilowatt-hour of electricity they use. The new prices will be applied retroactively to February's power bills.

Prices for industrial production and households will remain unchanged, the province's economic planner said.

Companies in Shenzhen pay as much as 1.03 yuan per kwh of electricity, among the highest in the country.

The commission said the price reduction is one of the achievements of a pilot reform of the city's electricity transmission and distribution system that started on January 1.

The three-year pilot was designed to let market forces, rather than transmission companies, determine prices, and peg the fees to the real costs of sending electricity from plants to users.
That's a hefty savings after only three months of reform, but it turns out the cost savings may be putting the cart before the horse:
A manager at a Shenzhen power plant said the latest price cut came only at costs of cutting Shenzhen grid's profit margins and investment plans and Shenzhen still needs to buy electricity at higher prices from the provincial grid.

Nevertheless, experts said the Shenzhen pilot will help officials work out rules and pricing mechanisms for transmission systems nationwide, and thus build a foundation for further liberalization of the sector. Beijing authorities ultimately hope to loosen the pricing influence of power transmission companies and let power plants sell directly to consumers.
Shenzhen power producers are being asked to do more with less. When they figure out how to do it, the plan will go nationwide.

Beijing Banks Slow To Change Mortgage Policy On Second Homes

In late March, China Lowers Down Payment Rates for Buyers of Second Homes
On Monday, the People's Bank of China said buyers of second homes will be required to make a minimum down payment of 40%, down from the current 60%.

The government lowered the floor on down payments, but it did not make the policy mandatory. Many Beijing banks require 50% down payments on second homes because they're worried about excessive leverage. Four of the five big banks require 50%, and ICBC hasn't budged from 60%. Huaxia Bank, Shanghai Pudong Development Bank and Woori are down to 50%. Whether home buyers can obtain the lower down payment level may depend on their credit and assets. Some banks are also still "researching" the new policy and have yet to implement changes. Home buyers wishing to tap Beijing's public housing fund still need to pony up 60% to 70% for a down payment.

iFeng: 二套房贷新政在京缩水执行 首付五成为主流

2015-04-15

Top Chinese Listed Real Estate Firms By Market Cap


iFeng: Top 100 Listed RE Firms

Renminbi Volatility Will Increase

Some background: Upcoming reform to bring more capital to China: economist
Major reforms toward the Chinese currency's full convertibility expected in the next five months will encourage more capital inflow into China this year, Deutsche Bank said in a report on Wednesday.

The resulting capital inflow will add to the yuan's strength against other currencies and lead to more liquidity to support growth for the world's second largest economy, said the bank's chief China economist Zhang Zhiwei, though he did not specify what measures will come along.

Overseas investors still face hurdles to expand exposure to China's capital market, though the country has taken measured steps in recent years to loosen grips over its capital account.

China has pledged to make the yuan convertible under the capital account this year during the country's annual parliamentary session in March.

While China is on its way to undoing more restrictions over capital flowing through its borders, Zhang said regulators will still maintain necessary controls to keep financial risks at bay.

From 21st CBH: 人民币汇率波幅或扩大 第二强货币的上下限在哪?
According to the State Administration of Foreign Exchange announced the "2014 China international payments report," 2014 China's international balance of payments surplus of $ 257.9 billion total, down 48% compared with 2013. Among them, the current account surplus of $ 219.7 billion, up 48%; the capital and financial account surplus of $ 38.2 billion, down 89%. Although the overall balance of payments surplus presents, but more substantial decline in surplus in 2013 emerged, showing face some downward pressure on the yuan.

Experts said, looking ahead, the yuan has now vulnerable. RMB appreciation cycle lasts 20 years or over, two-way volatility will increase, there may even be a mild case of devaluation, but a large devaluation appears less likely.
Whatever your forecast for the Chinese currency is, opening the capital account widens the potential trading range for the currency and increases the odds of a large devaluation.
Hang Seng China retail banking and wealth management business executives Houxue Ming believes that "the future of the RMB exchange rate changes will have a significant period of time span, for two reasons: First, the dollar will be a long bull market; the second is China's economic slowdown, interest rates drop quasi may become the norm. "
A formula for a potentially large devaluation.
Greenwoods Asset Partners, a Hong Kong company executives had Xiaosong reply reporter said in an interview, "the RMB against the US dollar exchange rate fluctuations depends on the Sino-US trade surplus, China's monetary policy and capital account liberalization process, surrounding the national currency depreciation, as well as IMF October this year to assess whether inclusion of the RMB cross a variety of factors, such as SDR currency basket, expected future volatility of the RMB exchange rate will increase, down 2% on the benchmark exchange rate fluctuations restrictions are likely to widen."
If China fully opens the capital account this year and allows cross border flows, there is a significant risk of a major devaluation. I would say extremely high, if only because I get the sense that "the market" doesn't fully appreciate how this will change perceptions, let alone reality. The way the renminbi has behaved to date is that it falls nearly every time the reserves either stay flat or slightly decline. China's reserves are protected by the closed capital account, but once it is open, the changes in the reserves will become more volatile.

The Market is Simply NOT Expecting This to Happen
When you have been involved in the markets for many years you will probably come to realize a pattern in market behaviour. Periods of low volatility are followed by periods of high volatility. This observations tie in nicely with Nassim Taleb’s concept of fragility and anti-fragility: systems that appear stable and have not been subject to stress are inherently fragile. The more stress a system has been subject to the more anti-fragile it becomes.
A key factor is the U.S. dollar. The U.S. dollar weakened as China purchased large amounts of U.S. treasury bonds. I sense the general opinion of the opening of China's capital account is that since this is long-term bullish for China, the renminbi will appreciate. In the short-term, however, a rising yuan, caused by a rising U.S. dollar, is bad news for China. Anything is possible, but I don't see a rising yuan on top of a rising dollar as a likely outcome. More likely is China sees capital outflows, which leads to the selling of U.S. treasuries and the depreciation of the yuan versus the dollar as those treasuries are sold. The "China sells treasuries, U.S. dollar tumbles" thesis only works if China's reserves are growing or stable. If China's reserves are falling, the amount of assets backing the yuan is falling.

H/A Shares Discount List Widens Again on 20150415

Spreads widened as the list of 71 companies below fell 1.81% on Wednesday, trailing the 1.45% increase in the Hang Seng China Enterprises Index.

Largest H/A-Share Discounts as of 2015-04-15

Beijing Real Estate Market: Activity Up More Than Prices

More anecdotes and data out of Beijing. A woman and her husband looked for homes during the Qingming Festival. The area she looked at was mostly existing homes. The agency was very busy with people and customers waited a long time before meeting with an agent. While activity picked up, prices did as well, about 5% by her reckoning, which in her opinion is not much and not nearly as much as the increased traffic might suggest.

For the first week of April in Beijing, new home sales climbed 19%, a 191% increase yoy. Existing home sales fell 14% on the week, but are up 39% yoy. Existing home prices over the past 6 days ticked up 1%; prices are down 2.26% yoy.

Overall, the outlook from the industry is generally optimistic and attractive properties are seeing the most pickup in activity. At this point, the data reflects that government policies have moved buyers off the sidelines, but they are taking advantage of mortgage policies and opting for new homes, rather than existing homes.

iFeng: 购房者花了3天看遍了附近楼盘 得出一个结论