Squeezing The Largest Asset Class On The Planet

Squeezing The Largest Asset Class On The Planet

Over the past six months, copious amounts of digital ink was spilled on China's escalating regulatory crackdown and the ramifications for assets of all kinds, with an initial emphasis on equities. The focus on equities was understandable given the genesis of the reform effort. It started with an antimonopoly push which, notwithstanding the usual ambiguity associated with Party capriciousness, was overtly bearish for China's tech titans. As the crackdown expanded, the losses piled up, eventually
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10 thoughts on “Squeezing The Largest Asset Class On The Planet

  1. The “clear and present danger” that I do not like was China’s response to the HMS Richmond sailing through the Taiwan Strait. The action of sailing through that narrow, 80 mile wide stretch of water was characterized by the Chinese as an action that “harbored evil intentions”.

    I certainly hope that the Taiwanese who do not want to be under future Chinese rule are making their exit plans and not waiting until it is too late.

  2. Hey Walt, would you have access to data about real estate as a proportion of asset classes for Canada? It likely shows Canada somewhere between China and the USA. Might raise some eyebrows.

  3. This is reminscent of late 1980s when Japan’s property market was worth 4X that of the US. After which property values fell some -90% to -99%.

    Sure, China has far more units of property than the US does, but price/income is multiples higher. Price/income may not matter when apartments are for speculation but it should when apartments are for living. Maybe China’s property market isn’t 10X overvalued, but it might be 2-4X overvalued.

    So, anyone remember how (and if, and when) money was made on the long side from the deflation of the Japanese property bubble? Or the deflation of the US property bubble? Note I specify “long”.

  4. If you take very rough numbers and consider the US population is 1/4 of China but GDP per capita is 4 times as much it seems to me it might be a reasonable comparison. That inventory number is crazy.

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