China’s stress tests are proving more stressful than those in the USA or Europe. The Beijing version required that banks test for a 50-60% drop in real estate prices. This has spooked the share prices of China’s banks and big property developers as well.
West China Securities analyst Wei Wei (too bad he does not talk Yiddish) told Bloomberg that this shows “that the government won’t loosen its curbs on the property market.” Actually, it shows nothing of the sort. It may well be that Chinese authorities turn around and allow real estate investing to resume its growth. There are plenty of factors to support a switcheroo. First there is demand for decent housing. Then too local government authorities are encouraging new developments because they can get paid for the leasing of land for the new homes. And then too China does want to mop up some of that money flowing into its reserves domestically. The regime is not set on a crackdown against building, only against speculation by owners of multiple empty letting properties.
The news service also reported that Kireichow Maotai (a Chinese firewater maker) rose sharply in Shanghai trading today. No it was not the bankers and real estate agents seeking solace; it was because of strong earnings as China’s consumers buy something they like to drink.
Meanwhile here in the East End of London, the pubs are falling like flies. At least three in a short distance from Mudchute Manor are now shut in seeking a new tenant or owner. The reasons: first the arrival of lots of Muslims in the area, who don’t go to pubs. Then the smoking ban which drove clients away. And finally the downturn in the economy which meant it made sense to invite your friends to your house for a booze-up (and a smoke) rather than paying more to the inn-keeper.
Despite the claims of some rival newsletters, nobody can pick stocks which only go up and never go down. There is a trick we are aiming for, instead. To mostly pick stocks which do not go down. If we can find more shares rising than falling we will get ahead of the market.
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