The death of Shanghai real estate vs. low market risk

12 Aug

Volatility in the Chinese stock market hit its lowest level this week since April 2007. Check out the graph below.  Seems investors are seeing less risk in Chinese stocks at this time.

Now, data out today shows that new mortgage loans in Shanghai dropped by an massive 98% in July… Yes 98% – that was not a typo.  In the past I’ve described the merits of an authoritarian input to the market – well here’s an example of the dark side of such authoritarian input.  A large decline was expected as the government continued to enact tightening policies this month, and transaction volumes are known to have declines.  However this is  huge and more than an indication that Chinese real estate is in for a hard landing.  Expect spill over, not least in the volatility chart above!

Oh – and check out China’s M2 – also ground to a halt in July. Not a positive sign!

Volatility in the Chinese stock market hit its lowest level this week since April 2007. Check out the graph below.  Seems investors are seeing less risk in Chinese stocks at this time.

https://ravendragon.files.wordpress.com/2010/08/vol.jpg

Now, data out today shows that new mortgage loans in Shanghai dropped by an massive 98% in July… Yes 98% – that was not a typo.  In the past I’ve described the merits of an authoritarian input to the market – well here’s an example of the dark side of such authoritarian input.  A large decline was expected as the government continued to enact tightening policies this month, and transaction volumes are known to have declines.  However this is more than an indication that Chinese real estate is in for a hard landing.  Expect spill over, not least in the volatility chart above!

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