End of Buying Restrictions Shows Spec Demand is Gone

Here is what I've said many times about buying restrictions:
...easing buying restrictions is a bad policy because it won't work. It allows speculators and investors to buy up homes, but the trend now is for investors and speculators to sell homes. It may help the big investors who need to offload 100 homes to another big investor, but speculation has died down considerably. In cities that have eased policy, they have made it easier for home buyers to obtain residency. Those cities have made home buying more attractive.

I'm not ready to declare total victory yet because September and October are the big sales periods, but.....报告称内地多城楼市取消限购后成交量仍下跌 (After Many Cities Cancel Buying Restrictions, Sales Still Fall)

The article says that Hangzhou, Jinan and Nanning have seen some quick results following the cancellation of buying restrictions, but most cities have seen no impact. Jinan has seen area sold triple two weeks after easing restrictions, while Nanning average weekly sales are up 27% since it unofficially eased 11 weeks ago. However, sales are down from the 170,000 sqm sales peak in the first week to about 100,000 sqm per week. Hangzhou and Wenzhou saw huge weekly sales spikes recently (see here and here), but that growth also may fade quickly.

Regarding Nanning, it is one of the cities that eased restrictions: Nanning Fires First Rescue Shot

Back to the latest article, Changchun and Wuhuan have seen small sales bumps of 5% following the easing of buying restrictions. Tianjin and Xiamen have seen no increase in sales. Nanchang and Wuxi have seen sales continue to fall. Source: .报告称内地多城楼市取消限购后成交量仍下跌

Elsewhere: Qingdao has eased restrictions on homes 144 sqm and larger. (青岛明日起有条件放松限购 市区144平米以上将不限购)

Chinese buyers now have a "wait-and-see" attitude. Even if the cancellation of buying restrictions could have an impact, the big sales period is September and October. Buyers may wait until then, when price discounts are expected to be bountiful and many new developments will enter the market. Discounts will be guaranteed if sales don't pick up in August as well because it will be developers last shot at big sales in 2014.

For myself, I'm looking at puts on SFUN.

You Can See Why Developers Are Optimistic: 2000 Panic Buyers

This is the crowd that showed up to buy housing in Hangzhou once the buying restrictions were lifted. Vanke is selling a new property in Yuhang district of Hangzhou.

It is worth noting that Yuhang has a housing inventory that is well over half of Beijing's, but its population is less than 2% of Beijing's. All of Hangzhou has a population roughly one-fifth of Beijing's.

More photos at the link. The third photo shows all the homes sold out.

杭州房子随便买 楼市再现“日光盘”遭2000多人抢购

Developer and Govt Selling Rush

The moves to ease buying restrictions and some stronger GDP data have the developers itching to raise prices and local governments rushing land sales (in the article below it is Yuhang district of Hangzhou). Some sales are indeed jumping in Hangzhou and Wenzhou at the high end of the market, sparking big upticks in sales figures. No doubt there is some pent up demand, and it's logical that it would be at the high end due to limited supply. The question is how deep this demand goes and if we will also see buying pick up in the middle and low end of the market. The article notes that "third parties" are not as optimistic as developers and local governments.

Notable: the count of cities easing buying restrictions is now up to 30 of 46.

楼市松绑:开发商酝酿涨价 地方政府借势推地
The purchase of the property market deregulation make frequent opportunity yet to

Several cities to cancel the purchase after another came the news is.

Just this week, Zhejiang, Hangzhou , Wenzhou, Ningbo are gradually be relaxed for the purchase, the purchase in 46 cities nationwide, and has about 30 cities actually began deregulation policies to varying degrees.

Nonetheless, the property did not pick up signs, most cities in a "flash in the pan" type of peak-type deal. Medium and long term, property markets continues.

Restriction relaxed list will be expanded

In Zhejiang Province, the purchase of pre-existing cities including Hangzhou, Wenzhou, Ningbo, Zhoushan, Shaoxing, Taizhou, Zhoushan.

So far, only Zhoushan, Shaoxing, Taizhou, there is still a restriction policy. Yesterday, Ningbo also joined the relaxed camp.

Yesterday, Ningbo Municipal Construction Committee official microblogging news release said, starting July 31, the purchase of Ningbo City, county (city) and Yinzhou, Beilun, Zhenhai, high-tech zones housing (including commodity housing, second-hand housing), is no longer needed Family housing situation queries proof. Buy Haishu, Jiangdong, Jiangbei central city housing is no longer used to provide family housing situation queries proof.

This is considered to be the policy of Zhejiang restriction relaxed version of the most thorough one. Hangzhou 140 square meters or more, compared with just relaxed, Ningbo policies seem larger scale.

Moreover, the purchase of Wenzhou also be relaxed, this house prices fell by 34 months of continuous city in March this year, it intends to be relaxed, wait until the end of July, Hangzhou took the lead after deregulation, this joined with lightning speed relaxed camp.

Compared to the country's situation is somewhat similar with this, more than half of the city are on the deregulation policy. Previously, Hohhot, Jinan, Suzhou , Nanning, Haikou five cities to implement the purchase of the first to confirm the cancellation of official restriction.

In addition, Centaline Group research center monitoring shows that as of July 23, at 46 restriction cities in 26 cities for the purchase of the policy fine-tuning (limited purchase cancellation, partial cancellation, the implementation level to cancel or rumors of cancellation), urban restriction " relaxation "rate of nearly 60%.

This list is constantly expanding. "There will be more relaxed city to join the camp, but did not estimate the north of Guangzhou." Director of CB Richard Ellis, general manager of Hangzhou 马英枢 said pressure tier cities is relatively small, the larger northward wide demonstration effect, even if deregulation, the intensity is limited.

Deal a "rebound"

In Hangzhou, the market situation for example, as at 22:00 on the 29th, Hangzhou multiple mansions have the money for the transaction: Riverside City Star 6 sets of transactions, and homeland traded five sets, four sets of transactions Greentown orchid garden, the Arc de Triomphe turnover of a sets, a set of ten villas turnover ...... According to statistics, the main city of Hangzhou mansion volume more than 30 sets of turnover over 400 million yuan.

A similar situation also appears in the private market statistics relaxed week Wenzhou, Wenzhou market after last week, Wenzhou city's total turnover of real estate 875 sets of closing an area of 123,000 square meters, the ring than the second week of July of 542 units, 62,600 meters, respectively, an increase of 60% and 96%.

Compared with the confidence of developers, third-party organizations seem more rational, most thought it was the release of a stock.

"From this day transaction data can be seen, there are large units and the total characteristics of high." 马英枢 said, most of these customers before the purchase of deregulation has been a clear intention, before the market also has been rumored to be unbundled Therefore, the policy will be landing at the first time to the next one. The turnover of the entire inventory of Hangzhou accounted for very little and can not really ease the inventory to slow the problem.

In contrast, many developers seem to boost confidence, "It's more than two days, customers are single, and some still are hesitant to state, yet negotiated price customers fear the latter will also have the next single." Xiaoshan of a local developer, told reporters that the restriction is relaxed brings market confidence, so many people to become more active buyers.

However, many developers in Hangzhou also said, this does not relieve the market really caused problems, especially more than 140 square meters of the house before deregulation, the impact of this drop in the bucket.

Developers, government rob business?

A ranking TOP10 of the number of real estate developers are brewing its price adjustment.

"After the purchase of release, we intend to price adjustment. Currently the default solution is price 500 yuan / square meter." Where the person in charge of a project, told reporters that their current plan is to start from August 1 the price adjustment.

They will carry out its multiple real estate price increases, previously, if the purchase order has not relaxed, they were more often lower prices.

There are some developers tried to cut prices to "extension off", "some customers exist at this time intent, if the price is in place, it is likely to be the next single." Hangzhou local developers say they will in the near future a number of promotional units go Billiton passengers.

A developer to take advantage of low-cost three-TOP build off the opening, two hundred thousand suites source came the panic room, "with the intention of customers active in the market recently, so the recent price war is a good time."

Interestingly, not only the developers out to grab customers, the local government is also an occasion to push land.

July 29, Hangzhou has just declared that "the main city of Hangzhou, 140 square meters and over to unlock the purchase, Xiaoshan, Yuhang District, two full lifting of the ban," the local government will invite developers Yuhang District, its promotion of land. Yuhang district government in 2014 to read the manual, this manual is divided into west articles, north articles, Linping Vice City, Metro Chongxian four, pushing the amount is large, which only had 40 foxglove.

This is also a time to let go because of the restriction, the Government has followed out to grab business.

More critical is a good market last year due to Hangzhou, Yuhang District, sold a lot of high-priced land, and even lack of "Lord" plots. Gouzhuang deep plate Yuexiu Property [ 2.38% ] is a typical case, last year to 9,600 yuan / square meter of floor price won a residential land, and close to the North Chen light Vanke take their half of the land is not to.

However, some of the data and is not optimistic, Yuhang property land was very hot. According to statistics, in 2013 the amount of 26.637 billion yuan from land Yuhang, a record high. The annual transfer of buildable land area of ​​3.679 million square meters, this amount is nearly one-third over the same period in Hangzhou city, much larger than the Xiaoshan District, Hangzhou, the largest amount of land to sell all districts (counties) in.

As at 16:00 on the July 30, Hangzhou city's inventory is 134,579 units, of which 36,179 residential units. Yuhang District inventory 49,964 units, 41,327 housing units, housing accounted for 82.7%. The statistics show that the total volume 10,409 units during the first half of Yuhang, only a quarter of stocks.

It is worth noting that earlier this year, more developers Hangzhou Gouzhuang plate close price war, this sector for many developers shunned the land.


How Zhou Yongkang Was Caught

A long and detailed look at the fall of Zhou Yongkang.
How Xi Jinping Swatted Flies to Trip Biggest China Tiger
Like peeling the layers of an onion, the Zhou project has worked through layers of associates. First his old comrades from when he led Sichuan province were rounded up. Next, investigators ran through his colleagues in the energy business. They picked up in-laws of his, and his son. After that, they took down his associates in the Ministry of Public Security. They left the toughest for last -- his inner circle of senior advisers and personal secretaries.

Wenzhou Ends Buying Restrictions

In Wenzhou, non-residents will be treated equally with residents when it comes to purchasing real estate.

温州楼市限购全面解禁 外地户籍与本地待遇同等
Known as an important barometer of China's property market in Wenzhou, known officially fully liberalized property purchase .

"Wenzhou Metropolis" official microblogging news shows, July 29 afternoon, the Wenzhou Municipal Construction Committee held a news conference to announce the purchase of Wenzhou release housing policies, housing transactions are no longer registered in the verification of existing housing situation, the policy from introduced after the conference.

This is also in Zhejiang province, following Hangzhou release official position after the second purchase of the city. It is understood that, as early as in 2011 when, 11 prefecture-level city in Zhejiang Province, Hangzhou, Wenzhou, there are eight announced the implementation of the " restriction order . " "Wenzhou property market declined almost bottomed out, then release the restriction to normal." Real Estate Institute of Zhejiang Province Academy of Social Sciences researcher Wang too on " Daily Economic News "reporter, said other cities in Zhejiang Province will continue to release publicly.

According to the official news release microblogging Wenzhou Metropolis Daily, except real estate transaction registration without verification of existing housing situation, the "outside Wenzhou" and "new Wenzhou" In the warm purchase permanent residents enjoy the same treatment in Wenzhou City, Wenzhou will also actively seek financial institutions to support the implementation of the first home loan deals.

In fact, last August, for the purchase of Wenzhou had a modest relaxation. According to its provisions, within the policy framework for the purchase of the State Council, Wenzhou, the local version of the restriction order to be adjusted to allow a local family residence in the city to buy second homes.

March 26 this year, investment in private enterprises in Zhejiang Province president Zhou German federation had said: "after two sessions, I heard that the municipal (Wenzhou) Construction Committee, led the drafting of a comprehensive program, has been reported to the provincial government."

"Later, Zhejiang authorities following statement is not supported nor opposed by the Wenzhou themselves decide." Wenzhou, a leading developer of local executives to the "Daily Economic News" reporter, said so.

Thereafter, on July 22, for the purchase of the property market in Wenzhou deregulation, the newspaper had published an article entitled "the purchase of the property market in Wenzhou quietly let developers waiting in the wings to take to prepare food," the article coverage.

It is understood that in the pre-purchase the full liberalization of the property market, the Wenzhou government departments had met study. Wenzhou Daily reports indicate that on July 28, the Wenzhou city government held its fifth plenary meeting, Wenzhou will release the "restriction" policy director Zhou Wenzhou Municipal Construction Committee also made it clear that the right to keep, Wenzhou want to make the purchase of the policy according to the actual situation some adjustments, mainly to support the needs of buyers of public improvements.

Credit Guarantee Firms Continue to Implode, Private Bonds Default

Much of the financial press focused on another potential corporate bond default last week, which was averted when Huatong Road & Bridge received a bailout. This doesn't mean the overall system is being bailed out. Private bonds are still defaulting and credit guarantee firms are still falling like dominoes. Multiple cases are unfolding across the country, with the big one in Sichuan and now one in Tianjin. The sums at stake are as large or larger than the averted default last week, but additionally these private markets are extremely regional. Losses are not diversified across public markets, but concentrated in one of China's regional economic zones.

From Sina Finance:
A private bond from a Tianjin composites manufacturer is headed for default. Employees at that composites firm said the company has no cash flow, unless you tear apart the factory and sell it off. The composite firm's parent company is involved in credit guarantees itself, to the tune of about ¥400 million, in addition to other debts it cannot repay. The underwriter of the bonds in question is China Securities Co. One private market analyst said these defaults do not affect the bond markets, but they are a major blow to the private debt markets. He estimates that this case will increase credit costs in Tianjin by 50 basis points. He also said that even good credit guarantee companies are failing due to systematic risk. Source: (海泰或失担保能力 投资人拒绝12津天联延期)

From 21st Century:
Also involved is Tianjin Hi-Tech Investment Guarantee (天津海泰)failing to make good on a credit guarantees. Although regulations say a credit guarantee firm cannot lever up beyond 10 times its capital, Hi-Tech is levered up to 13 times its capital of ¥500 million. The firm's legal representative has gone missing and employees at the firm are resigning one after the other. The firm is being sued by multiple banks and many borrowers. The borrowers cannot repay and are demanding that Tianjin Hi-Tech fulfill its guarantee to repay. There are more than 20 cases already underway, which combine for about ¥350 million yuan. Hi-Tech also made guarantees on the above mentioned private bonds.

“12津天联”兑付关口再沟通 海泰担保危机大起底
"Jin BBDO 12", "12 Kim Tae debt" incident sparked concerns about credit risks.

Informed sources, currently on "12 Jin BBDO 'bond reimbursement issues still under negotiation process to settle arrangements for follow-up programs have not been clear, but is actively coordinating relevant departments in Tianjin, investors are still on the government to do to help restore possible loss of more than something to look forward.

A source close to senior underwriters that according to the beginning of the bonds to raise the agreed point of view, July 29, 2014 implementation of the right to sell back the final deadline for investors. If the settlement before the close of the 29th, as long as the parties agree through negotiation, settlement, if not handled directly by the CSI board allow repayment of principal is not accounted for breach of contract.

However, the bad news is that, as was July 10 in Japan for a similar bond default interest "12 Kim Tae debt", to settle the issue is not fully implemented, is facing difficulties. The Commission made it clear that at a regular press conference on the 25th, and asked to "market, legalization" principle proper disposal, and suggests investors bonds issued in accordance with the contract, to actively seek arbitration, civil litigation and other legal means to safeguard their legitimate rights and interests .

The Shanghai Stock Exchange has requested the Issuer, the Trustee and effectively perform their duties, and with local government departments approached, safeguard the legitimate rights and interests of investors. Zhejiang Securities underwriters also have repeatedly organized bondholder meetings and major shareholder of the issuer to communicate, to seek ways to defuse the risk of default.

Difficult performance guarantee company

Wind data show Hitech guarantees for "12-chun BBDO" provide "full unconditional and irrevocable joint and several liability guarantee" from the date of the guarantee period for the "guarantee letter" in effect until the current private placement bonds related to the expiration of the debt date two years. But informed sources, Hi-Tech has secured through informal channels to 12 Tianjin BBDO confirmed the bondholders can not fulfill guarantee obligations.

According to Hi-Tech reporter obtained the guarantee of financial data, as early as the end of the first quarter of 2013, the registered capital of 500 million yuan guarantee balance of Hitech guarantees reached 7.592 billion yuan, up to a multiple of 13 times guarantee. According to the "Provisional Regulations financing guarantee company," the balance of the financing obligation secured financing guarantee company shall not exceed 10 times its net assets.

Debt Credit particular commented that due to the presence of defects in Hitech security aspects of risk management, resulted in a significant decline in profitability. 2013 was partially secured corporate event of default, due to assume security responsibility Hitech guarantee larger compensatory occurred, the company increased the provision rate guarantee compensation reserve, according to its 2013 audit report, the company accrued year guarantee compensation reserve 133 million yuan, resulting in its net profit fell sharply to -1.73 billion.

Also, if you take out the guarantee risk provisioning for each of the factors, net profit fell provision before 2013 the company is still very serious, partly because of a serious decline in 2013 revenue levels, while holding to maturity investments exist part of the entrusted loan impairment, the impairment of assets entrusted loans have risen sharply.

Litigation involving multi-pen

People are surprised that, in the issuer's legal representative Ji-group "lost contact" core staff have left, almost in closed state, unable to guarantee the company will not only compensatory, or even facing many lawsuits are subject to judicial freezing of assets, included in the national courts the debtor promises list, which sum bonds issued from just one and a half years.

According inquiry was informed 21st Century Business Herald reporter, Tianjin Hi-Tech Investment Guarantee Co., Ltd. in the National Court debtor information inquiry system has five information to be enforced, the filing period from May 2013 to February 2014 May 25, 2010. Involving an amount of 117 million yuan, of which there are two cases 3 700 million is still running.

Another reporter learned that, since 2014, Hi-Tech guarantees the defendant's case is also up more than twenty cases, involving 3.46 billion yuan. Most of them because Hitech secured as collateral, borrower can not repay the loan and requested jointly and severally liable. There is a sum of 66.87 million yuan of loans from its own natural Hitech guarantee Xu, since not returned and sued by creditors.

Because the majority of cases still pending, the creditor has applied to the court in advance asset preservation, freezing and seizure of banks guarantee Hitech corresponding assets. In several cases, execution, execution Hitech guarantee objections raised and asked the court to "suspend the deduction of funds to creditors in order to avoid the loss can not be recovered. Lifted or partially lifted bank account, allowing it to handle the normal corporate guarantee business, prevent the risk of further expansion, causing social instability. "

Hi-Tech to provide security guarantees because, unable to pay its creditors and the case to court, many creditors are banks. For example, loans to Tianjin Tianjin Branch of China Merchants Bank Co., Ltd. Top tires provided 13.24 million yuan. Huaxia Bank to Tianjin Xing Chuan Freight Co., Tianjin Mei Teng Copper Co., Tianjin East politics of concrete mixing Engineering Co., Ltd. to provide loans were 15.37 million yuan, 18.12 million yuan and 25.19 million yuan of. Tianjin to Tianjin Branch of Bank of Communications Science and Technology Development Co., Ltd., Baxter loan 18 million yuan. The fourth branch of the bank loans to Tianjin Tianjin Sheng Delong Garment Co., Ltd. and Tianjin New Technology Industrial Park O-Net Technology Co., Ltd. and 9,000,000 yuan to 13 million yuan, respectively.

In addition, some of Hitech back guarantee private lending companies and small loan guarantees. Tianjin Construction Union were limited by guarantee, 15.21 million yuan loan; Juhui Microfinance Ltd. of Tianjin, Tianjin Landmark Microfinance Ltd., Watson Microfinance Ltd., Tianjin Joint Venture Investment Guarantee Co., Ltd. has tens of millions of loans guaranteed by Hitech guarantee, the borrower is the medium most small businesses.

Particularly noteworthy is that in addition to 50 million yuan guarantee Hitech "12-chun BBDO 'private debt guarantees, but also for the issuers of bonds Composite Materials Co., Ltd. of Tianjin Binhai guaranteed another two pen financing. March 2014, creditors Parc Wealth Investment Management Limited Tianjin Binhai days because of the Allianz Group Co., Ltd., Tianjin Binhai two pen composites were 12.44 million yuan and 23.52 million yuan loan can not be returned, so apply to the court The debtor and the guarantor guarantees Hitech corresponding assets seized.

According to the lawsuit incomplete information, including the "12-chun, BBDO," including, Hitech provides a total guarantee amount guaranteed jointly and severally liable for up to 85,960,000 BBDO composites.

Or adverse impacts to fish

In late July after the 21st Century Business Herald reported that the first "12-chun BBDO 'principal and interest on the verge of default, to provide" full unconditional and irrevocable joint and several liability guarantee "security guarantee Fanghai Tai insolvent, there is pessimism for breach of contract The spread.

21st Century Business Herald reporter queried by Wind, in addition to "12-chun, BBDO," there is another two bonds guaranteed by the Hitech participation guarantee.

One of them is "12 Tianjin Binhai SMECN1", namely Tianjin Binhai Hi-tech SMEs year 2012 the first phase of a collection of notes from Tianjin Hi-Tech Investment Guarantee Co., Ltd. Tianjin Bohai Financing Guarantee Co., Ltd. joint guarantees, in 2015 2 January 3 officially expires. As the market in the inter-bank bond issuance sum, this may be the direct cause Dealers Association requires an understanding of the situation.

Another sum is "13 JH 01", ie Neptune Offshore Engineering Technology Co., Ltd. of Tianjin in 2013 SME private debt (Phase I), guaranteed by the Tianjin Hi-Tech Investment Guarantee Co., Ltd., in 2015 a May 9th maturity.

In addition, the parent company of Tianjin Hi-Tech Hi-Tech Guarantee Holding Group Co., Ltd. also issued a seven-year term in 2010, 1.5 billion yuan of corporate bonds. This should provide the sum bond rating report in 2013 to track this year, but the reporter did not check online information in Chinese bonds to the above report.

According to the 2012 Emirates International tracking its rating report, the Tianjin Hi-Tech Holding Group's 2012 net operating cash flow was -14.48 billion, net operating cash flow / total liabilities and net operating cash flow / current liabilities -6.91% and -15.08%, respectively, in 2012 the company invested net cash flow was -7.38 billion from January to March 2013, the company invested net cash flow and net cash flow from financing activities was -1.49 billion and $ 1.26, respectively, billion.

In fact, the first single issue since July 2012, private debt between two rapidly expanding market size, until the end of June reached 471, 59.697 billion yuan.

Xu Hanfei reminded intensive outbreak of a credit event has a negative impact on market sentiment. Overall, the market adjustment mark, intensive credit event disclosures on market sentiment bring further negative impact, especially in high-yield debt of private sector, the opportunity to profit-taking pressure is relatively large. This stage of the impact of market sentiment, investors Bukebufang.


CASS Researcher: Real Estate Collapse in Second and Third Tier Cities Possible

Ni Pengfei, Director of the Urban and Real Estate Economy Research at the Chinese Academy of Social Sciences (CASS) and also the Director of Center for Cities and Competitiveness, says a collapse in some eastern second and third-tier cities is "entirely possible," though a national collapse is unlikely. Another researcher said housing demand won't peak until between 2020 and 2025.

Ni also said the lifting of buying restrictions would have little effect, though he said first-tier cities such as Beijing and Shanghai would not lift restrictions because a lot of speculative money would come into the markets there, wiping out years of efforts to limit price increases.

Chinese housing market fell short inevitable, ordinary commodity housing prices will enter a period of 2-3 years of adjustment.

Yesterday, the Academy of Social Sciences Institute of Finance strategy, urban and Competitiveness Research Center released in 2014, "China Housing Development (interim) report" in Beijing, revealing view.

Although overall not collapse, but the editor of the report and director of the Academy of Urban Competitiveness Research Center Ni Pengfei believe that some of the higher prices rise, the amount of the early development of second and third tier cities in the eastern part of the larger "collapse entirely possible. "

Experts predict that the property market turning point will appear in 2020-2025 between.

Stage into a structural surplus property

Summarizes the characteristics of the housing market in the first half of this year, Dr. CASS Institute of Finance Strategy Zoulin Hua believes that large and medium cities showing the initiative to adjust the situation, the national property market into structural surplus stage.

January of this year, 70 cities, prices fell only 6, to June, a decline of cities has increased 55, fell face rapidly expanding, albeit still limited, only a city of Wenzhou rates price fell below the same period last year.

The National Housing turnover shrinking significantly in the first half of this year, the first half of this year, China commodity housing sales area and sales fell by 7.8% and 9.2%, respectively.

With sluggish sales and medium-sized cities nationwide housing prices declined slightly, 邹林华 said, the real estate business capital returns slower, development and investment growth continued to decline, to the first half of this year, the growth rate has dropped to 13.7 percent year on year.

The slowdown of the property market over the next decade

Whether prices will collapse? Zoulin Hua believes that the market in the short term active adjustment is inevitable, but it will not enter the ongoing recession and depression, "ordinary commodity housing prices will enter a period of 2-3 years to adjust."

Ni Pengfei further analysis, the overall property market collapse will not occur, but the "partial collapse is entirely possible." He believes that as housing prices rose too high, excessive pre-development of second and third tier cities, it could collapse, such as , Wenzhou, Zhejiang Province, in addition to some of the city outside, it is more risky.

"In the long term, the next ten years the property market slowdown in demand growth in 10 years." Director of the Academy of Social Sciences Research Center for City and Competitiveness Ni Pengfei said.

Then, when the property market will be the turning point? CASS Institute of Finance assistant researcher Dr. Li Chao strategy based on estimates believe that the inflection point roughly in 2020-2025, then, China's urban housing demand will no longer have a rapid increase in conditions.

Purchase whether full liberalization?

According to media statistics, since only in July, has been included in Jinan, Haikou, Hangzhou , Suzhou and other 10 cities relaxed the restriction policy. Whether the purchase of the property market will be fully liberalized?

"First-tier cities will not cancel the purchase." Ni Pengfei think that if Beijing, Shanghai and other cities to cancel the purchase of the policy, the influx of speculative demand will be immediately after the regulation effective on naught.

Previously, Beijing Mayor Wang Anshun in the first half of the economic situation analysis meeting, said Beijing would not loosen easily purchase and other measures, otherwise it will affect the sustainable development of cities.

Experts believe that in the case of bank credit policy has not changed significantly, the release bailout restriction policy had little effect. "But if there is change in the housing market and then passively release, you may be missing an opportunity, no need to bring to the market impact." Ni Pengfei that, for some real estate investments have fallen sharply, prices have fallen sharply, a significant increase in inventory areas, should By allowing local governments to take measures to release or discharge of the purchase, etc., to avoid unnecessary panic in the market and funding strand breaks.


Hangzhou Eases Buying Restrictions, Developers Hope to Raise Prices

Hangzhou has eased buying restrictions on homes larger than 140 sqm. In Xiaoshan and Yuhang districts, buying restrictions have been eliminated. The news has boosted the optimism of developers, who expect an increase in sales. Some of even speaking of prices increases. This carried over into the stock market, where Chinese shares have been rallying.

July and August sales tend to be light, so these policy adjustments may produce some positive results in the data, but whether it sparks a reversal is another story. Once market sentiment has changed, almost nothing can change it back. These policy changes affect investors the most and they are the most sensitive to credit conditions and sentiment.

[This official microblogging news release, immediately caused a chain reaction of developers, local industry and even rumors developers to price adjustment news. However, these adjustments brewing developers did not disclose the price or how much, but said, depending on the market situation to be]

Around at 18:00 on July 28th, Hangzhou real estate circles in multiple micro-channel group biography, Hangzhou will be released the same day news of the ban on the purchase of the official website.

Subsequent 18:30, Paul lived in Hangzhou Housing Authority (Housing Security and Housing Authority) official microblogging issued a new message: "This year, the real estate market in Hangzhou overall smooth, but the housing supply and demand of regional and structural contradictions highlighted by the study, the municipal government agreed that from at 0:00 on July 29 onwards, the city purchased Xiaoshan District, Yuhang District, housing (including commodity housing, second-hand housing) without providing housing situation query records; bought the main city of 140 square meters and more housing (including commodity housing, second-hand housing) query records without providing housing situation. "

This official microblogging news release, immediately caused a chain reaction of developers, local industry and even rumors developers to price adjustment news. However, these adjustments brewing developers did not disclose the price or how much, but said, depending on the market circumstances. A Xiaoshan developer, said yesterday after the opening of the purchase, sending him a lap SMS, temporarily sold four houses. "These customers fear price increases, would also hesitant, a policy immediately" pay "the."

According to incomplete statistics, as of now, there are already more than 20 cities have liberalized the purchase. "From a market perspective, Hangzhou is the first release of the quasi-tier cities, many second-tier cities will be stronger than normal release of the citizenry." Managing Director of CB Richard Ellis Hangzhou Company 马英枢 said.

Long-awaited policy

The previous week, maybe a week most local developers suffering. "There was news that the policy will be out on Monday, he said later on Friday will be the policy." Hangzhou Xiaoshan A local developer of the " First Financial Daily "correspondent said many times before they were about local government talk.

Reporters learned yesterday from the Hangzhou Municipal Government led an internal seminar held again, and ultimately make a decision. The result: the main city of Hangzhou, more than 140 square meters (including 140) release the purchase, Xiaoshan District, Yuhang District, the purchase of a comprehensive ban.

This is the year after the "two sessions", a set of multiple sets of scenarios. Multiple developers told reporters, after the purchase of Hangzhou has been lifted in two versions, one of which is the release of Xiaoshan, Yuhang district, there is a more than 140 square meters, including the main city.

They have been holding the lowest expected value, it is unexpected that the scales yesterday in Hangzhou government policy for many developers feel the excitement. This is multiple developers that are living on the recent Minister of Construction , Chen Gao improve the real estate policy comments made ​​"in which the first is to do everything possible to digest inventory" implementation.

It is one of the cities of Hangzhou high inventory, before June this year, Hangzhou housing 4859 sets the average monthly contract, the average transaction price of about 15,000 yuan / square meter, according to the market rate of digestion before six months, 132,300 sets of Hangzhou property market housing stock , to melt cycle over 27.23 months.

This transaction sets, compared with the same period of the past six years, came in third from the bottom, just above the market regulation has just introduced in 2010 and 2011. The first half of last year, 41,061 sets of real estate transactions in Hangzhou, totaling 4,466,500 square meters, the average transaction price of 17,790 yuan / square meter. Compared with the first half of last year, housing turnover Hangzhou fell almost exactly one-third.

Developers want to raise prices crashed

Compared with the general mentality of the developers of the carnival, some third-party agencies seemed more rational. "We care about is whether to wait and see attitude can lift? Trading volume is to expand? Whether prices will go up?" 马英枢 said.

In this regard, the executive president of China Easy Home Dingzu Yu believes that the purchase of a subsequent relaxation of the problem is: in the end can not pull the deal?

Behind these fears is to invest in a slowing trend. Data show that in 2014 1 to June, the national real estate development and investment 4.2019 trillion yuan, up by 14.1% nominal growth (after deducting price factors, the actual increase of 13.1%), the growth rate down 0.6 percentage points lower than 1 to May. Among them, the residential investment 2.8689 trillion yuan, an increase of 13.7%, the growth rate down 0.9 percentage points, the proportion of real estate investment was 68.3%.

Real estate investment is decelerating many developers lack confidence. Yesterday's deregulation policy for many developers feel confident of recovery. "Xiaoshan, Yuhang stocks have been relatively large, so go stocks become the main theme of Hangzhou, Xiaoshan, Yuhang fully liberalized in favor of focusing the purchasing power of Zhejiang Province, the main city to adopt a" Paul just need "strategy, is conducive to maintaining the stability of the entire market. "A Xiaoshan local developer, told reporters this scale very well just the right policy.

"First of all, wait and see attitude short-term fluctuations may occur, resulting in a large apartment sales rose slightly in the short term, but it will not last long. Market is only a pre-release suppressed demand, but the demand itself does not significantly increase the oversupply melody has not changed From the market supply current to a small apartment just need disk-based situation, an increase in sales of large units can not effectively solve the inventory problem. "马英枢 told reporters destocking will be a relatively long-term task, and to cancel the purchase just sounded the opening percussion. And in the long-term task, expect prices back up it unrealistic.

However, some developers are trying to adjust prices. "Prior to the price war hit too hard, more than the smell of gunpowder in the area are more concentrated close combat name a price war, this time just to have the opportunity to tune a tune, now guaranteed pretty good." Yesterday, TOP10 of a developer told reporters that some of their real estate brewing price adjustment in the near future.

Previously, Hangzhou Gouzhuang plate, bridge plate competition is very fierce, and many developers are close to the cost of the opening price, the number of developers in order to tout brawl occurred many times. "The market is too difficult to do, particularly difficult this year." One developer Hangzhou Bridge plate revealed that many disk or to just be family-based, but this adjustment will bring confidence in the market implies that surface.

It is noteworthy that, just yesterday, Xuzhou quietly loose tie. Since August 1, the purchase of real estate is no longer available Xuzhou purchase inquiry proved to sign and print real estate is no longer need to enter queries proof number when the contract of sale. But there is no formal document issued only verbal notification, without saying anything. This means that the purchase of Xuzhou fully liberalized policy, regional policy implementation will no longer purchase.

Xi Willing To Accept Slower Growth

Xi Jinping comfortable with lower growth rate for China's economy
President Xi Jinping believes a slight slowdown in economic growth would be acceptable, Li Yang, a deputy head of the Chinese Academy of Social Sciences, told a briefing yesterday as the government think tank said growth could ease to as low as 6.4 per cent.

"[Xi] repeatedly said it wouldn't matter if economic growth slows a little bit. It's nothing worse than delivering a score sheet less pretty than that of the predecessors - even so, it would not be a big deal," Li said, referring to remarks Xi made at a meeting with government economists on July 8.

How Quickly the Sentiment Changes on Buying Restrictions; Beijing WIll Not Expand Affordable Housing

Only last month, the central government was pointing out that no city had publicly cancelled its buying restriction policies. Today, more than half of cities with restrictions have eased. It has now reached the point where the Beijing mayor had to come out and publicly state that Beijing will not ease buying restrictions due to still elevated prices.

Also, the Beijing Municipal People's Congress has passed a draft resolution saying the city will not build more affordable housing once the current wait list of 100,000 is exhausted. Instead, Beijing will focus on renovating shanty towns, with a goal to renovate homes for 150,000 families by 2017. One complaint with the affordable housing is that it is located too far from the city center, in areas with far less public transportation and infrastructure, which is one reason why many buyers are refusing affordable housing. The city also wants to avoid the creation of slums. New rules may "guide" developers to build cheaper housing at the same time they put up more expensive developments.

北京市长:房价还在挤泡沫 不会轻易放松限购
The face of the first half of the city's commercial housing turnover declining trend, Beijing Mayor Wang Anshun , said recently: To calm observation, we can not intervene, not easily introduce new real estate policy, and even take measures to relax the restriction and so on. Otherwise, it will weaken the power of structural adjustment, the impact of urban sustainable development.

Beijing recently held the first half of the economic situation analysis will be revealed in the first half of this year, the Beijing New housing contract to reduce the amount of 44.5% year on year price increase for eight consecutive months of decline; hand housing contract volume decrease of 52.6%, the price of the ring than three consecutive months decline.

Wang Anshun analysts say prices "flat to down" is the basic objective pursued over the years the real estate regulation, or behind the market play a decisive role in helping out in previous years, the accumulation of foam, and promote long-term healthy development of the industry. In the second half, Beijing should continue to focus on the trend of late, to ensure policy continuity, stability, deepen structural adjustment of real estate, and innovation to strengthen market supervision, give full play to the real estate in steady growth, improve people important role.

And electrical Beijing Municipal People's Congress recently filed for "Beijing urban basic housing security regulations (draft)" for consideration. Beijing Municipal Commission of Housing and Urban-Rural Development Director Yang explained at the time of Ordinances clear that existing affordable housing, commodity housing and other affordable housing for the record has been closed, in addressing the existing approximately 100,000 families waiting for housing After the difficult issues, Beijing will no longer build affordable housing and housing prices.

北京保障房新规将出台 或实施封闭式管理


CASS Worried About Hot Money Outflow

CASS sees Chinese economic growth stable in 2H and monetary policy stable to a bit looser. In contrast, the U.S. economy is expected to strengthen and interest rates to rise, both of which will close the gap with China. The net result will be increased currency outflows.


Capital Outflow in Q2 Marks Turning Point for Yuan

The headline is deceptive: China sees more capital inflows in H2, uncertainties linger
"The renminbi (yuan) exchange is now near equilibrium and two-way cross-border capital flows have become a new norm," he said.

......China was under pressures from capital inflows in the first quarter, but the tide turned in the second quarter as volatility in the yuan fuelled outflows, Guan said.

......China's central bank and commercial banks sold 88.3 billion yuan ($14.3 billion) worth of foreign exchange on a net basis in June, according to a Reuters calculation based on central bank data released on Tuesday.

China's current account surplus may widen in the second quarter, but net inflows under its capital account may decline sharply, or even show a deficit, Guan said.
The decline in June was the first new outflow in 10 months.

An end to forex inflows has implications for China's money creation. The central bank swaps renminbi for forex held by banks, businesses and individuals, but if capital inflows turn stable or even switch into reverse, money creation will need to come from other policy tools. Another factor is the cost: it is expensive for China to continue this system.

China’s trade surpluses and the cost of sterilization
China’s trade surplus in itself has become the driver of more rapid implementation of financial liberalization. The PBoC must sterilize a large portion of the capital inflows generated by trade surpluses that otherwise would create far too many renminbi deposits and ultimately to excessive domestic credit creation. Over the past 10 years of large surpluses, the PBoC has sterilized about 75% to 80% of its net capital inflows and, notwithstanding this huge intervention, domestic money supply consistently has increased 15% to 20% per year, well in excess of nominal GDP growth. After a decade of intervention, this sterilization has created US$3.1 trillion in deposit reserves held by the PBoC on behalf of state-owned banks plus about $700 billion in bonds issued by the PBoC to further withdraw bank liquidity. The PBoC must pay interest to the banks on these assets, which now carry a rate of around 3.7%. This subsidy to banks now amounts to 1% of GDP (see table below) and in my opinion has reached a tipping point whereby the PBoC needs to speed up financial liberalization both of the exchange rate and interest rates because the cost of the subsidy rises inexorably in tandem with the trade surplus. China was able to take its time in opening the capital account during the early years of large trade surpluses because bank's deposit reserves and the cost of sterilization were small. Now that the cost is escalating rapidly, however, China has little choice except to allow two-way capital flows and greater renminbi flexibility.

If capital flows do stabilize or reverse, how will the central bank inflate?

China central bank gives CDB 1 trillion yuan
China’s central bank has provided 1 trillion yuan ($171 billion) to China Development Bank (CDB) for re-lending to the reconstruction of shanty towns, Caixin reports.

The People’s Bank of China (PBOC) is channeling the funds via a new monetary tool called "Pledged Supplementary Lending" (PSL) to test medium-term interest rates according to China Business News.

The PSL is a new type of supplementary lending instrument backed by collateral that is used to inject liquidity into the market. It is hoped the tool can play the role of benchmark interest rate in the medium term.

PBOC Mulls New Tool for Regulating Money Supply, Guiding Rates
For most of the past decade, the central bank's monetary policy has largely hinged upon the condition of foreign capital inflows, which were mostly converted into the yuan at banks.

When inflows surged, the central bank would strengthen operations to mop up excess liquidity; when they ebbed, it would make up the shortfall by increasing money supply through open market operations and other ways.

The growth of foreign capital inflows has slowed and started fluctuating widely in the last two years, raising the demand for the central bank to manage money supply more actively than by just responding to changes in cross-border capital flows, the source said.

Here is Yu Yongding on China's capital account situation and the risks of capital outflows: China’s experience in capital account liberalization

More Beijing Residents Give Up Affordable Housing Rights

The previous anecdotes of Beijing residents giving up their affordable housing rights were on target. Of 300 people who won the latest lottery, only 47 chose the affordable housing, less than 16% of winners. Very important to note is where the housing is located though. A friend of mine won the recent lottery in the western part of Chaoyang (close to the city center) and I suspect 100% of the people took the housing there because it is impossible to buy cheaper. However, the project in this case is 15 km south of the sixth ring road, only 15 km from Langfang.

Home prices are moving lower, but the main story here is that once again, government fails. Affordable housing projects in Beijing are coming to market in greater numbers at a time of already rising inventory. Sales volume is down and new projects are coming to market in large numbers. Some of the projects are in undesireable locations, so far away from the city center that they might as well be in Hebei province. If you live in Hebei province, you don't need to enter a lottery in order to obtain a license plate.


This news may be one reason why Beijing is considering letting more buyers into the affordable housing market.

Poor take priority with social housing
A draft regulation on affordable housing has been stirring controversy in Beijing over recent days. Much of the fury is focused on a proposed rule that would cancel income limits normally imposed on social housing applicants.


Governments Build Ghost Offices

Not due to lack of demand. In Jiangsu and Guangxi province there are newly built and renovated office spaces, but no one dares move into the new buildings because last July, the central government passed a rule stating that no new buildings should be built for the next 5 years. An official in Jiangsu said that when the project started, there weren't as strict regulations, now no one dares go against the law and move in.

江苏等多地新建办公楼现值 因风声太紧无人敢搬进

Background from March 2014: Ban on new official buildings enforced
The central government vowed on Wednesday to further push ahead with a ban on the construction of new government buildings as part of an ongoing frugality campaign.

So far, 147 officials have been investigated and 55 punished for violations, and supervision will be strengthened, according to a statement released after a State Council executive meeting presided over by Premier Li Keqiang.

The central authorities introduced a five-year ban in July on the construction of government buildings. But some local authorities ignored the rules, the statement said.

The central government will encourage the exposure of unapproved new government building projects and hold those officials accountable who failed to rectify the mistakes.

It will also increase supervision and inspection of public funds to prevent the money from being used to construct government buildings, according to the statement.

More Than Half of Cities Have Eased Buying Restrictions

Three more cities lifted buying restrictions in recent days: Wuxi, Xi'an and Shijiazhuang. According to the reporter's count, 27 of the 46 cities with buying restrictions have now eased. There are varying degrees of easing though. In Wuxi, homes under 90 sqm still have purchase restrictions. Shijiazhuang will allow non-residents and owners of two existing home to continue buying.

昨日三城放松楼市限购 内地已超半数城市调整政策


Beijing Home Price Sinks Below 10,000 Yuan Per Square Meter

Beijing has a new development selling homes for less than 10,000 yuan per sqm in Yizhuang, located in the southeastern Daxing district. Just the other day, I posted on how Chinese Homebuyers Are Returning Their Homes and that in Beijing, some buyers are even giving up their right to buy affordable housing, a right that was won in a lottery with 4000:1 odds. This case of sub-10,000 yuan housing is an example.

On July 23, reporters went to Yizhuang to Hopson's (0754.HK) World Village Apartments new project site. Reporters found a large number of buyers came to view the site and many customers even gave up their affordable housing rights to buy housing directly from the Hopson Global Village Project. A Ms. Yang told reporters, the 13,000 yuan / square meter affordable housing has common property rights (owners must sell back to the government), and the 9800 yuan / square meter property has personal property rights, so she chose to give up her affordable housing eligibility and purchased this property.

One analyst said Hopson's move is of important significance because with many cities cancelling buying restrictions, non-resident Beijingers are buying homes in their hometowns instead of in Beijing, sapping demand in the city.

Between the rising supply and weak demand, prices will likely come down in the second half.

9800元破空出世 北京主城区房价击穿万元
July 24, price 9800 yuan / square meters of commercial housing will officially enter the market started the Beijing property market price just to be "shot." Serious and regions of the world is located in the village apartment Hopson new push product, price 9800 yuan / square meter market, the main city of Beijing to become the first prices "broken million" project.

The project is located Serious majuqiao core plate that covers the community of international life business center, clubhouse Dragon Court, Technology Park and other facilities, new push for the 70 existing homes with two bedrooms flat products, the apartment is not marketing the loft apartments, and is a regular flat layer structure, is the real deal of 9800 yuan / square meter.

Executive director of the World Union Properties Beijing company Liu Yan in an interview with reporters, when, said: "This is a qualitative breakthrough into since July, Nanjing, Guangzhou, Beijing and other cities affected by tight credit, since housing continue to enter the market and other factors, the property market! downturn continued to spread, most developers will choose to price change. "

Flat floor apartment , breakdown ten thousand yuan market

July 23, reporters came Hopson Serious and regions of the world village apartment new products to push the project site. Reporters found that in the global village Hopson large number of buyers to the site showings, many customers even gave qualified buyers from the housing directly select Hopson Global Village Project, a Ms. Yang told reporters, 13,000 yuan / square meter house is the common property nature property rights, and 9800 yuan / square meter of housing is holding its own property, so I chose to abstain from the purchase of housing eligibility, select real estate.

Hopson Development General Manager North China 朱思昊 time in an interview with reporters, said: "Hopson price of less than one million global village, since housing prices have been far below the recent wave number from cost-effective, it has been a very cost-effective. "

A developer to give reporters calculations, "Hopson World Village throws 9,800 yuan / square meter price launch new products, to become the first in the main city rates broken million project. Hopson global village located on the Serious and regional perspective implementation of Beijing city plans and regional value rising, prices of less than 1 million project as early as five years ago, have been rare; same within six rings also FRANSHION nearly 4 million project price / square meter, and this year April, CAC Group plots in huangcun get too close to the floor price of 20,000 yuan / square meter, and even less than half of its land in the village of New push Hopson world's elite venture partner in apartment prices. "

With the implementation of the "south of the plan", the land south of Beijing transaction prices continue to rise, the reporter access to Beijing land reserve center Web site noted: 2012 Serious land transaction price floor price for 11,000 yuan / square meter -1.5 million / m, 2013 floor price of about 23,000 land / m, 2013 hot market has been steadily rising. Daxing District, prices from 15,000 yuan / square meter in mid-December last year rose to 40,000 yuan / square meter. However, after this, the property market turned down, in March of this year, Vanke orange lead the first drop, live in South Central is located in Daxing District Tiangongyuan total area opened Vanke orange, rough house price 21,000 yuan / square meter, planing to go decoration prices, lower than the expected price Vanke about 3000 yuan / square meter, the opening day almost "Daylight." Vanke down from orange collar, promotional efforts fierce day Daxing area a day.

Frozen in time to usher in the price of the property market

The market price of such stories, not just occur in Hopson global village, in a large number of such stories staged.

July 22, reporters access to Beijing Municipal Construction Committee net signed data: the first half of 2014 the total turnover of 4466 Beijing commercial housing units, new commercial housing to the first half was 27.4% of the overall market project contract rate of only 6.2% , its lowest value since 2006 Beijing has recorded net signed since the same period, while investment in real estate development, housing construction area, business area of ​​land acquisition and multiple property market indicators, such as real estate sales area, there were growth fell phenomenon.

While stocks continue to rise, but a large amount of real estate they rushed into the market after June 33 projects focus on the market, in July Beijing commercial housing supply continues unabated. July Beijing opened a total of 36 project, which includes Hung Kun Nishiyama Evelyn, Suning · statue Wyatt Building, China Railway Construction Green show Uptown and other 12 pure new disc, as well as Chinese industry Oriental Rose, Run maple neck still, Road King post-World City, CITIC House and other 24 old projects, 17 projects have been given pricing, nine projects to parity or below market price is expected to enter the market, the price ratio of 52%, while housing prices have taken "cheap running volume "sales strategy. Among them, China Vanke happy sinks, the first city Driveway Bay respectively 14,000 yuan / square meter, 13,100 yuan / square meter price of the market, while the first of Xi Yue Poly spring 22,500 yuan / square meter of sales price, real estate prices did not appear .

Vice president of China Real Estate Research Hu Zhigang, when in an interview with reporters, said: "With the local government to cancel the purchase, many foreigners choose home buyers, weakened the purchasing power of Beijing, Beijing real estate will usher in a correction, the second half of the year as a whole Residential real estate market prices may not have to pick up a substantial sacrifice part of the project's sales profits in exchange for money hunters take to prepare, or worthwhile, Hopson World Village apartment new push products on the Beijing property market is of great significance. "

Keung, vice president of China Real Estate Association also told reporters analysis: "Beijing property market will make the second half of the frozen state of the property market prices to appear loose, there will be an increasing number of housing prices to select the appropriate price." But two experts believe that Beijing not yet reached the crash situation, but for Beijing buyers, is a good time to purchase.

Another Boss Hits the Road, Only This Time It's A Listed Company

The boss of Fujian Nuoqi (1353.HK) and his wife have run off with the company's funds, leaving behind at least ¥1.5 billion in debt. The firm IPO'd earlier this year. Clearly Mr. Ding took the term "cash out" to a whole new level.

Menswear maker hit by speculation
Fujian Nuoqi (1353) chairman and chief executive Ding Hui and his wife Chen Ruiying have absconded with funds, leaving the menswear maker owing huge debts, Sina Finance reported.
The mainland media outlet quoted a Sina Weibo posting by Linda Chen Liling, general manager of a shoe material company in Quanzhou, Fujian, for its report. Chen deleted the Weibo posting later, but insisted she was not slandering the couple.

Trading on the stock, which plunged more than 50 percent this week, was suspended on Wednesday. Sources said its major shareholders were offloading the shares after the expiry of a six- month lock-up period following its IPO - the year's first in SAR.

The stock closed at HK$1 before the trading halt, down 53.05 percent from its listing price of HK$2.13.

As noted, the stock IPO'd earlier this year, in January. Here's the chart.

Chinese coverage puts the debt at more than¥1.5 billion. A banker with Everbright says many of the firm's prjects were rejected by Everbright and other banks. Nuoqi spent a lot of money to go public and already had high debt levels, there is also mentioned of high interest loans needing to be repaid. 媒体称官方证实诺奇老板跑路 涉15亿贷款.

Provincial Growth Rates Pick Up At Bottom, But Still Off Target

This first chart shows the GDP growth rates for each province through the first half. The provinces way off, such as Gansu and Yunnan, are less important economically than Zhejiang, which is off by 10% (7.2% versus 8% target). Hebei province picked up considerably from it's first quarter growth rate of 4.2%——its first half growth rate climbed to 5.8%, which implies a roughly 7.4% growth rate in the second quarter. The second chart below has the first quarter GDP growth rate (right column) and the first half growth rate, but Hebei and Shanxi are cut off by the logo. Shanxi's Q1 GDP growth rate was 5.5%.

China eyes quality development despite slower growth
As China shifts its focus to a more balanced development model, gross domestic product (GDP) growth is decelerating in many parts of the country.

According to figures released by Hebei Provincial Bureau of Statistics (HPBS) on Wednesday, GDP growth of north China's Hebei Province in the first half of 2014 increased by 5.8 percent. But this was dwarfed by the 8.7 percent growth rate over the same period last year.

Hebei, which borders Beijing, has been trying to cut polluting facilities such as cement, steel and glass, the major powerhouses driving its economy, as the province is partly blamed for smog that has blanketed the Chinese capital.

"In the first six months, we have seen a 1.6 percent increase of the tertiary industry and a 1.5 percent decrease of the secondary industry in terms of GDP proportion," said Yang Jingxiang, deputy head of the HPBS.

A similar situation can be found in Beijing, which reported 7.2 percent GDP growth in the first two quarters, falling short of the 7.7 percent expansion recorded from January to June in 2013.

Beijing closed the Gaojing Thermal Power Plant, a subsidiary of the state-owned China Datang Corporation, on Wednesday, replacing it with a gas-fired facility to curb pollution. Three other coal-fired power plants are expected to be closed by the end of 2016.

Other provinces and regions, including Guangxi, Guangdong and Jiangxi, all reported slower GDP expansion in the first two quarters, as China drops the growth-at-all-costs economic development model that has tainted the country's air, water and soil.
The article goes on to note that GDP growth is not the sole criteria anymore, yet from the looks of things GDP growth is still the main focus. The 4.2% Q1 GDP growth rate in Hebei was low, but one could believe it was a quality number as they transitioned away from heavy polluting industry. This last quarter they managed to boost GDP to 7.4%. I doubt that was high quality investment, at best it was planned investment brought into the present, growth today at the expense of future growth. At worst, more capital destruction.


The Great Shandong Garlic Futures Collapse

High interest loans! Garlic futures trading! Virtual money! Margins raised from 20% to 50%! Price limits moved from 5% to 18%! Trading halt and ¥280 million in margin gone in an instant! Total losses nearing ¥400 million!

Global financial markets had been eerily calm for weeks, but this placid condition has been shattered by the great Shandong garlic crash. For more than a month, the August garlic contract on a Shandong electronic exchange had held between 2,700 and 2,800 yuan per ton. Bear raids were not unheard of, but all had been successfully repulsed. While bears were held at bay, the price on the exchange was abnormally low. The spot price for garlic was 3,200 yuan and other exchanges in Shandong province were already above 3,000 yuan per ton on the August contract.

In June, bulls poured into the market once they spotted the undervalued garlic contract. Even though the bulls grew their position to 60,000 tons, the price still wouldn't budge. Many exited in June, but by mid-July there were still 20,000 tons of open interest. Who was the giant short behind the scenes, keeping a lid on garlic prices no matter how many bulls showed up? None other than the general manager of the exchange using virtual money against the paying traders! Following margin hikes from 20% to 50% and the widening of the trading band from 5% to 18%, on July 15, garlic opened 18% limit down. The market shut. Hundreds of millions in customer funds vanished in an instant.

This isn't the first case of a collapse in Shandong province either, in the past few years there have been several cases involving thousands of people and hundreds of millions of yuan in damages. Right now, another exchange (Qingdao Jinzhifa) is also in trouble. It's bank account should have hundreds of millions in client margin, but there's only ¥27 in the account. 青岛金智发多日不能正常出金 涉交易商资金近4亿. According to sources, Jinzhifa obtained its capital via high interest loans.


"Shandong Agricultural electronic disk is now nearly 300 million hunted Bureau margin was missing

  Laiwu Economic Herald reporter Wang Yanfeng reports

  Trading plunged 18 percent, almost all long warehouse explosion; nearly 3 billion of customer deposits were missing, remaining 1,200 million; Meanwhile, actual controllers lost contact, was suspected escaped and fled.

  This is (called "Shandong Agricultural" below) in Shandong agricultural electronic trading market staged a "hunting bureau."

  "This is simply robbery!" Investors Chen said angrily. He invested more than 40 million in the electronic disk, is now already a minute left, actually owes more than 3000 yuan.

  Notably, "Shandong Agricultural" is known as the Shandong Provincial Department of Commerce's commodities electronic trading venues. Economic Herald reporter learned that, "Shandong agricultural products" by the Shandong e-commerce Limited (hereinafter referred to as "Shandong business") operations, which have some relationship with the Shandong Provincial Department of Commerce.

  Shandong agricultural products, "Hunt Office" has once again exposed the industry's ills: the organizers free to manipulate the market, there is no security to speak of margin regulation.

  Disk: long annihilated

  At 8:50 on the 15th Xu, then there is less than 10 minutes, "Shandong agricultural products" is about to open. Just at this time, a blockbuster announcement "turned out": "Shandong agricultural products" will be corrective, July 15, 2014 for all contracts last market trading day, the day up 18% decline in adjusted.

  18% Price Change What is the concept? The market had price limit is 5% margin ratio of 20%. In the 14th, the market is the main contract fell more than 2 percent, some investors have appeared insufficient margin. If the 15th fell by 18 percent, almost all the bulls will burst positions, some investors even a "down due to" phenomenon.

  Sure. Opened at 9:01 on the 15th, the main market contract "garlic 08" and "garlic 12" straight away daily limit of 18%.

  In all investors, Qu Hong from the Northeast is the most tragic one. In several minutes before the accident, he also scored funding.

  Before the 14th, Qu Hong holds 11 million yuan on the bull. 14, "Shandong Agricultural" garlic contract fell, he believes the opportunity comes, then into 80,000 yuan of funds to the account in order to increase the position and guard positions. Before the 15th day of the opening, 8:00 more than 30 points, the composer once again flood into account 14,200 yuan.

  9:00, opening up, Qu Hong-open the disk, shocked: how nursing positions funding all gone? The previous day was still a breakeven account, now shows a loss of 14 million yuan, most are forced to liquidate positions.

  The proportion of flood losses are not the greatest composer. For many investors, because the previous trading day has dropped more than 2 percent, the 15th fell 18% again, 20% of the deposit has been zero.


  From the spot of the "casino"

  Just before approaching the opening day of the announcement is the last trading day, the price limit of 5% to 18%, the organizers have been very obvious signs of market manipulation. But this is not the worst offender.

  "Shandong agricultural products," the most obvious signs of being manipulated is that its disk prices have been completely out of stock.

  Qu flood came in May of this year, Shandong Province, Jinxiang, its original purpose is to store garlic. But he was surprised to find that garlic "Shandong agricultural products" is so cheap:. "In the 14th, the spot price has 3200 yuan / ton, the price of electronic trading in August contracts was 2,721 yuan / ton, I figured, the price is so low, When the garlic is stored on the Well. "

  Qu flood can never imagined, has been much lower than the spot price, after he entered again be plunged 18 percent. So he figured, if the price has been below the spot, he positions to the delivery date.

  But in fact, "Shandong Agricultural" spot delivery has been minimal.

  Departure from the current price of spot delivery poor, in this case, "Shandong agricultural products" has been reduced to a spot market from "Casino." Even more difficult to accept that such a "casino", places where transactions are not sure where.

  14 evening, because the question of departure from the current prices and organizers casual announcement, more than 30 investors rushed to the "Shandong Agricultural" location Laiwu City, the local public security bureau. Day morning, investors came in Laiwu City Urban Planning Exhibition Hall, here is the "Shandong Agricultural" trading places.

  15, "Shandong agricultural products," the door closed, empty. And in this case, "Shandong agricultural products" still announced and opened on time at 9:00.

  More surprising is that less than half an hour after the 9:00 opening, "Shandong agricultural products" stopped the disc; 11:30, various types of trading venues is time to stop plate lunch, "Shandong agricultural products" has opened up and started a large-scale forced liquidation; until 15:00, the time the disc is stopped, "Shandong Agricultural" still in the transaction; until 16:22, Herald reporter also saw an investor is forced flat warehouse transactions.

  Market place has been empty, why the disk can continue trading? 15 afternoon, dozens of investors in Laiwu City Public Security Bureau police station north Xiaoyi asked investigators, police officers reluctantly replied: "They may be somewhere else ......"

  Follow-up: money, people have gone?

  In the "Shandong agricultural products" announcement will raise the proportion to 18% margin on the occasion, there is more bad news. Have access to investors through personal relationships, financial investors have gone missing on the margin account.

  The last time the "Shandong Agricultural" Investors margin account balance is released in July 10, when the display has two accounts, of which ICBC account balances 288 million yuan, the Agricultural Bank ( 601,288 , stock it ) account balance 10.77 million yuan. To July 15 morning, the investor inquiries to the Industrial and Commercial Bank account balance, leaving only $ 9 million.

  Investors fear there is another thing: "Shandong agricultural products," the person in charge have lost contact. Prior to "Shandong Agricultural" in contact with investors, including senior chairman Liutian Lin, Supervisor Dou Wei, Trader people 李志胜. But from the beginning the evening of 14, lost contact with all these people. Herald reporter from the 15th to the 16th repeatedly dial the phone a few people are unable to get through.

  Lost contact with the person in charge, the margin was missing, is it escaped and fled?

  15 afternoon, investors' concerns in Laiwu City Public Security Bureau police station north Xiaoyi confirmed, investigators face the presence of dozens of investors admitted: account balance ICBC "Shandong agricultural products," the remaining 900 million yuan, the Agricultural Bank remaining account balance of more than 300 million. Moreover, funds are not transferred out of the past two days, but had already transferred one after another, the public security organs can only be individually survey of capital flows .

  When investors have called for the immediate control of the "Shandong agricultural products" related personnel, the investigators also acknowledged unable to contact Wei Dou, etc., and Liutian Lin may have been "double."

  Department of Commerce: individual behavior

  "Shandong Agricultural" The number of people involved, one important reason is that it has been the name of the Shandong Provincial Department of Commerce's company banner to attract business. "We believe that the Department of Commerce." Many investors said so.

  16, 2009, more than 50 investors came to Shandong Provincial Department of Commerce. Relevant person in charge explained to the investors, "Shandong Agricultural" in matters related to the Department of Commerce is a private act related personnel.

  Public information, "Shandong Agricultural" operated by Shandong provider. Herald reporter noted that the username "Shandong Agricultural" Investors margin account also for Shandong providers. The registered address of Shandong's Jinan City, 4th Floor, 6th Avenue Yang, Shandong Provincial Department of Commerce is the same office building.

  Meanwhile, Shandong's chairman had to 刘天林, but investors do not know 刘天林 in March this year, the company has ceased to be the chairman, the new chairman of WEI Chao. Public information, Liutian Lin served as director of the Shandong Provincial Department of Commerce Service Center, WEI Chao has been rated excellent Communists Shandong Provincial Department of Commerce in 2010.

  From the shareholder structure, Shandong's ultimate control by the International Federation of Shandong Province Economic and Trade.

  Shandong enterprise information publicity system display, Shandong providers registered capital of 16 million yuan, the largest shareholder of Shandong International Business Co., Ltd., holding 51%. Shandong International Business Co., Ltd. Legal representative Liutian Lin, from Qingdao International Exhibition Co., Ltd. Luen Fung holding 66.64% stake. Qingdao International Exhibition Co., Ltd. is the abundance of state-owned enterprises, the largest shareholder of Shandong International Economic and Trade Association, holding 80%.

  Shandong International Economic and Trade Federation influential, it is the system by the Shandong Provincial Foreign Economic and Trade associations, co-sponsored enterprises established in the Ministry of Commerce, former Minister had attended its opening ceremony. However, access to the Herald reporter whether the unit was not anchored in the Shandong Provincial Department of Commerce.

  16, 2009, the Shandong Provincial Department of Commerce, responsible person to face the visiting investors admit Liutian Lin, WEI Chao indeed Commerce Department staff, but they have other reasons to be "double", which is a private act in Shandong's behavior .

  In Shandong's senior ranks, sinus Wei has also been claimed to investors who are Department of Commerce. Shandong Provincial Department of Commerce staff on the 16th liberating Dou Wei is denied the Department of Commerce staff and contacted the same day sinus Wei. Dou Wei claimed in Hong Kong, on the 17th back to Jinan.

  Herald reporter learned that, Dou Wei is an important figure in the business in Shandong, and the equity ratio of 47% ranked the second largest shareholder. As of press time, had not returned from abroad Wei Dou message. Herald reporters repeatedly call his cell phone, but did not turn.

  Appeal: Margin third party custody

  "Shandong Agricultural" This incident has caused great shock in the industry. "Although there are many previous cases of market manipulation, but as 'Shandong Agricultural' so crazy, so naked, has never had." Shandong certain commodities trading places for people to Herald reporters such emotion.

  Herald reporter learned that the country intends to explore the development in recent years and more between futures and spot commodity trading market between. Then, "Shandong Agricultural" incident which occurred this revelation can bring to decision-makers?

  According to the National rectify commodities trading places "No. 38", Shandong (excluding Qingdao) retained the 10 electronic commodities trading market, the column "Shandong agricultural products" is not in the retained.

  Then say, "Shandong agricultural products" is not only a violation of "No. 38", customer deposits were missing and so are more likely to alleged crimes.

  Currently, the industry is "No. 38" controversial. If strict accordance with the "No. 38" rectification, most commodities trading venues will be difficult to survive. Because of this, standardized contracts, electronic transactions brokered model still prevails.

  But the situation "Shandong agricultural products," far more than violation of "No. 38" so simple. "There are two very deadly, one is suspected of participating in self dealing, market manipulation; another customer margin is going, where the flow is not already flowing overseas??" Above a Shandong commodity trading places for people that this only two points should be the focus of regulatory authorities.

  Industry experts, the Securities and Futures Beijing Technology and Business University , Institute director Hu Yu Yue told the Herald reporter, standardized contracts, and other electronic matching of these advanced trading patterns should not be banned, but should be widely promoted. But at the same time to increase the supervision and crack down on those market manipulation, misappropriation of clients in criminal acts, clean out the black sheep of the industry.

  China joint commodities trading market circulation Branch Secretary Zhou Xu, the 17th to the Herald reporter also analyze current industry urgent need to establish a multi-tiered regulatory system, to further clarify the trade rules. For deposits and other monitoring points, he appealed to the securities and futures industry study, "to establish a third-party financial supervision system to ensure the safety of customer funds."

Shanghai Branches of Big 4 Banks Cut Mortgage Rates

According to the latest news, the big 4 banks' Shanghai branches have cut rates 5% below prime.


Other banks in other cities are likely to discount as well: Chinese Banks Seen Discounting Mortgage Rates, Survey Shows
Banks will resume preferential mortgage rates, according to 74 percent of analysts and economists in a survey conducted from July 14 to July 17. Fifty-six percent forecast banks will lower minimum down payments, while 59 percent said they expected the central bank to ease its mortgage restrictions. A total of 29 economists and analysts responded to the survey.

Li Keqiang Blasts the Banks for Not Lending to Small Business

Li Keqiang slammed banks for only issuing large loans to big enterprises. Li wants to reduce to cost of financing, which is a very big deal considering the country is seeing a very low return on its debt.

China pledges more financial aid for small firms
After a weekly meeting chaired by Premier Li Keqiang, the State Council said many small Chinese companies still face financing difficulties, which could fuel risk in the economy.

So the cabinet said the central bank would raise the sizes of its "re-lending" and "re-discount" programmes to step up the supply of funds to smaller companies and the farm sector.

The central bank's "re-lending" exercise issues loans directly to commercial banks, which in turn lend to businesses. The "re-discount" programme requires the central bank to inject funds into commercial banks by buying their bills. Commercial banks then lend the money on to companies.

"The total scale of credit supply is not small, but companies, especially those smaller ones, are still facing financing difficulties," the cabinet said.

"This not only exerts a heavy burden on firms, it also weakens the effect of macroeconomic policies and brings about financial risks," the cabinet said in an online statement.

To alleviate the financing challenges of smaller companies, the cabinet told banks to cut the time taken to approve loans.

Based on growth in nominal GDP and the growth in total credit, the return on debt is getting close to 20%, or 5 yuan in new debt required for every 1 yuan in GDP growth. The U.S. didn't spend very long at that level in the early 2000s——debt growth accelerated and the return on debt plummeted, going negative during the recession. The U.S. economy was growing much slower, but looking at it as a return figure shows how the natural debt limit is being approached. Now, perhaps China can move this number back up through financial room, through redirecting capital flows away from state-owned enterprises and towards smaller companies, but this will hinge on the leadership's ability to overcome political opposition.

The debt situation is presented differently here: China's Total Debt Surges To 251% Of GDP. Same conclusion: the natural debt limit is approaching.

It is hard to see how China can boost growth without increasing debt though, not when it has a debt based model and a burgeoning real estate bust. Here's a warning from independent analyst He Zhicheng on real estate: 专家:中国经济绝不容许楼市出现暴跌 跌15%都不行. He says prices cannot drop 15% (yoy) because that would mean that many individual projects might be down 50%, real estate investment might slow to 5% growth and GDP would slow to 6% growth.

To maintain macroeconomic stability over 7.5%, the most important factor is to not allow a real estate slump. How to define slump? A drop of more than 15 percent this year, is the slump. A 15% drop can not be allowed because when the statistics show 15%, some areas and projects are likely to be down 50%, the future trend is likely to exceed 30%. Real estate investment is likely to fall to about 5% growth, the total investment growth rate may be less than 13%, GDP will slide to 6% growth. Now many people are still expecting prices plummeted. Look at the issue from the overall situation, the overall look, if the economy is running smoothly, if there's no anti-corruption, house prices falling by about 15% is nothing major, once the adjustment in place, it may not be out of the question. .......Prices may fall, but not plunge, can not have a "cliff" type fall.

If real estate prices cannot fall and China's economy cannot slow, there is only one path forward: more debt. Which is why headlines such as flash manufacturing PMI bounces to 52 in July are not greeted with knee jerk optimism.

Li on debt costs and need to lend to smaller firms: 李克强:有些银行只做大生意 不肯给小企业一点阳光雨露


Do Or Die Time For China's Real Estate Market

Home prices are coming down and if that trend doesn't stop soon, economic data is going to deteriorate in the second half. The September/October period looms large and it is premature to make a definitive call, but the data is still going the wrong way. If trends stay on course into the normally prime selling season and there's no improvement, there will need to be major downward revisions of Chinese GDP growth.

China real estate dominates the economy: official
About 60% of China's manufacturing and financing activities are related to the property sector, China's state media quoted a senior government economist as saying Monday.

China property chart du jour (yes, another one)
[Soc Gen] In summary, we think that real estate investment growth will continue to trend lower, likely to the level of 5% yoy (from 12.5% in June), a level last seen during the 2009 downturn. The IMF once estimated that a 1% decline in China’s real estate investment would shave about 0.1% off China’s real GDP within the first year. And so a 7.5ppt deceleration in real estate investment growth would drag down GDP growth by about 0.75ppt.
That is more optimistic than the Shenyin Wanguo analyst who predicted GDP would slip to 6.6% growth if real estate investment fell below 14% in 2014. A 0.75% deceleration in GDP growth stemming from a 7.5% drop in real estate investment is on the optimistic side.

聂梅生:楼市最低迷时期已过 (Nie Meisheng: The real estate bottom has passed) Nie Meisheng is the founder of the China Real Estate Chamber of Commerce. She sees prices stabilizing here. If she's right, that is good news for China's real estate sector and the economy. There's some evidence for that in still solid sales figures in some areas, and the national figure did begin ticking up in June (third chart below).

Now for some data from the NBS: June real estate investment figures. These are cumulative, yoy growth rates.

Real Estate Investment Growth Rate

Land purchases by developer (area)

New Home Sales By Area (yellow) and Yuan (blue)

Developer Capital

Table  2014 Year 1-6 month national real estate development and sales

The absolute amount
Growth ( )
Real Estate Investment (100M)
 Of which: Residential
    Commercial space business
Housing construction area (10,000 square meters)
 Of which: Residential
    Commercial space business
New housing construction area (10,000 square meters)
 Of which: Residential
    Commercial space business
Land acquisition area (10,000 square meters)
Land transaction price ($ billion)
Housing area (10,000 square meters)
 Of which: Residential
    Commercial space business
Real estate sales area (10,000 square meters)
 Of which: Residential
    Commercial space business
Commercial sales ($ billion)
 Of which: Residential
    Commercial space business
Housing for sale (10 000 sq.m)
 Of which: Residential
    Commercial space business
Real estate development enterprise funds available ($ billion)
 Of which: domestic loans
    Use of foreign capital
    Other funds
     Of which: deposit and advance payment
        Individual mortgage loans

Table  2014 Jan-Jun East-Central-West RE Development Investment

Land  area
(100 million)
An increase 
Total national
  Eastern Region
  Central Region
  Western Region

Table  2014 Jan-Jun East-Central West RE Sales

Real estate sales
Commercial RE sales
(10,000 square meters)
An increase 
(100 million)
An increase 
Total national
  Eastern Region
  Central Region
  Western Region