leviathan

http://parkislandhongkong.blogspot.co./2017/06/hot-hot-hot-and-why-property-is-still.html?m=1 This article has a similar target to me for a top in Centaline circa end 2018. I expect to get there a bit later than that possibly 2020 or 2021.

Trainee Investor - share you point abut developers playing catch up with the market. Think this explains why Centaline Index is now making new highs above September 2015 even if HK developer shares are not yet. Better value is most likely with the HK developer shares as their land banks are now becoming more valuable. Dr Bubb - Agree the sentiment is now more neutral a mix of commentators calling for price rises and falls by year end whereas this was overwhelmingly bearish this time last year. However, in the mass market I think there are still more bears than bulls probably due to affordability metrics. Some of these bears will become forced purchasers IMO as they reluctantly chase the market up tapping into Bank of Mum and Dad and other funding routes My tenant has just given notice so I will put on to rent and sell at the same time - I expect this will lead to a new tenant but we'll see. Lev

Posted 04 March 2016 - 09:47 AM Bounce seems to be happening/coming in HK property. I base this on - Sizeable bounce in HK developer stocks such as HK12 Henderson which seems to have retraced around half of its falls since the market started heading down in August 2015 - Signs from China that monetary policy has got considerably looser again - and that has spilled over into property eg Shenzen market reportedly up 50% - Stabilization and modest rises in HK centadata coming in last two weeks after CNY - Overwhelmingly bearish sentiment in commentary pieces etc in the press and on forums such as Asia Expat and Geoexpat To draw a parallel with the London market I know well I think we are at the March 2009 moment for HK property - does the money printing in China put a floor under the market as govt intervention did then in London {see the call made by the Berkeley Homes Chairman in early 2009 at the time where he was a lone voice calling the bottom against almost every other commentator calling for further falls} or does the market continue downwards after a dead cat bounce. The contrarian in me is calling for a sizeable bounce now based on a London 2009 onwards repeat {ie HK is half an 18 year cycle behind London} and the Chinese have plenty of scope still to ease monetary policy probably through interest rate reductions and easy money some of which will find it into HK property market like 2009. Any which way this is either bull trap time on the bubble diagram before a full on crash comes or its a London 2009 redux where authorities propel prices further into the stratosphere to multiples that become harder and harder to reconcile. I'm sticking with my HK property because its easy to manage from afar, in a market with good tenants and tenancy agreements, its a secure jurisdiction to invest in, its in a strong currency and the debt is now paid off. If I did sell then I think I would invest mainly in oil shares given we are getting close to historical inflation adjusted lows in the oil price But equally I may just be about to miss the last chance to get out - we should know within a couple of months _____________________________________________________________________________________________________________ I wrote the above approximately one year ago calling for a sizable bounce in Hong Kong property. I now think we may be about to see prices go vertical as we head into a blow off top phase. Why? - Developers shares are outperforming the physical market this year indicating further strength for HK property - Money is leaking out of China via companies outbidding HK companies for auctioned plots - Latest property cooling measures mean sellers must be really confident that they wont want to buy back in at a later date hence reducing supply in the secondary market - HK is following London about half a cycle behind IMO (2009 in London mirrors 2016 in HK - similar falls turned around then) I now expect prices to rise 30-50% as we head into a blow off top. Prime London has been falling since late 2014 so we may have a further five years (2016-2021?) to go in Hong Kong as valuations get really stretched. I expect this to confound nearly all market participants just as London did post 2009 and the only lever available to slow price rises remains govt cooling measures which until IR's normalise has proved a blunt instrument. Lev

Centaline this week hits all time high at 144.09 http://www.tradingeconomics.com/hong-kong/housing-index This is not unexpected to me see earlier posts - it seems like the surplus Chinese money has been avoiding Vancouver and London and heading in HK's direction instead. Main cloud on the horizon is another rise in US IRs in December but assuming this is 0.25% only the market may shrug off this rise as volume of Chinese money exiting the country continues at pace. Given its a new all time high for Centaline I suppose this could reverse quickly here but if this doesn't happen do people have any targets for where the top may come or indeed when? As a sterling investor locking in a profit through selling is quite tempting although I expect sterling to push a bit lower yet perhaps to c £1=$1.05 before bottoming out. Lev

I think we agree to differ on this Dr B - there could be contagion from other high RE markets like London/Vancouver as they turn down or paradoxically HK could benefit as capital looks for a safer place to hide. Here is Vancouver opting for property cooling measures a little after the event IMO http://www.knightfrankblog.com/global-briefing/news-headlines/vancouver-announces-15-tax-for-non-resident-buyers/ We saw in London that it was government support that boosted the London market from 2012 onwards - HTB and FLS policies aimed at ensuring re-election in 2015 lifted property prices dramatically upwards. Election coming in 2017 in HK will the current property controls and cooling measures survive or will they be rolled back with insiders frontrunning this - we'll see

Saw this picture on another forum. It looks uncannily like the Hong Kong Property chart until the last two years. I think HK has missed out on the last two years of the mania that you normally get in an 18 year property cycle and Vancouver certainly has had I suspect because of property cooling measures aimed at protecting the banks from a subsequent crisis. I think we can guess what is coming next for Vancouver - less clear what it means for HK? My own FWIW is I there is a significant chance HK property prices will reverse higher shortly given the bounce in developer shares which seem to have broken through the falling trend line to the upside. Will property prices follow or is the downside momentum too strong without the removal of the cooling measures? Will HK follow London's 2009 lead and reverse higher when all experts are calling for further falls. Is the current property policy a vote winner or will it get unpicked in the elections coming in 2017? Lev BUMP - I posted this 4 months ago since when Centadata has ticked up from 120 region to 130 region a 7-8% bounce. In HK I note developer shares continue to rise and some property analysts have turned bullish in the light of delays in US IR rises. Has the bargain phase for HK property passed as per London in 2008 and will property prices now start to take off to the upside again as they did in London from 2009 onwards for 5-6 years? Odds improving by the day methinks... Like This Quote MultiQuote

Saw this picture on another forum. It looks uncannily like the Hong Kong Property chart until the last two years. I think HK has missed out on the last two years of the mania that you normally get in an 18 year property cycle and Vancouver certainly has had I suspect because of property cooling measures aimed at protecting the banks from a subsequent crisis. I think we can guess what is coming next for Vancouver - less clear what it means for HK? My own FWIW is I there is a significant chance HK property prices will reverse higher shortly given the bounce in developer shares which seem to have broken through the falling trend line to the upside. Will property prices follow or is the downside momentum too strong without the removal of the cooling measures? Will HK follow London's 2009 lead and reverse higher when all experts are calling for further falls. Is the current property policy a vote winner or will it get unpicked in the elections coming in 2017? Lev

That's the best thing about market IMO namely that there are no certainties only probabilities, history and mean reversion to guide us. There is one scenario which could happen which would be very bad for HK property - namely a steadily improving US economy where interest rate rises happen steadily and progressively without crashing global stock markets and causing policy responses. In that scenario which the bond market doesn't consider the most likely answer at the moment - I think HK property is done and we will get the full blown crash many commentators are calling for only and the removal of the property cooling measures will be too late to make a difference.

Bounce seems to be happening/coming in HK property. I base this on - Sizeable bounce in HK developer stocks such as HK12 Henderson which seems to have retraced around half of its falls since the market started heading down in August 2015 - Signs from China that monetary policy has got considerably looser again - and that has spilled over into property eg Shenzen market reportedly up 50% - Stabilization and modest rises in HK centadata coming in last two weeks after CNY - Overwhelmingly bearish sentiment in commentary pieces etc in the press and on forums such as Asia Expat and Geoexpat To draw a parallel with the London market I know well I think we are at the March 2009 moment for HK property - does the money printing in China put a floor under the market as govt intervention did then in London {see the call made by the Berkeley Homes Chairman in early 2009 at the time where he was a lone voice calling the bottom against almost every other commentator calling for further falls} or does the market continue downwards after a dead cat bounce. The contrarian in me is calling for a sizeable bounce now based on a London 2009 onwards repeat {ie HK is half an 18 year cycle behind London} and the Chinese have plenty of scope still to ease monetary policy probably through interest rate reductions and easy money some of which will find it into HK property market like 2009. Any which way this is either bull trap time on the bubble diagram before a full on crash comes or its a London 2009 redux where authorities propel prices further into the stratosphere to multiples that become harder and harder to reconcile. I'm sticking with my HK property because its easy to manage from afar, in a market with good tenants and tenancy agreements, its a secure jurisdiction to invest in, its in a strong currency and the debt is now paid off. If I did sell then I think I would invest mainly in oil shares given we are getting close to historical inflation adjusted lows in the oil price But equally I may just be about to miss the last chance to get out - we should know within a couple of months Lev

Kudos to your call on HK property Dr B - I think the developer shares and pressure on HK$ recently imply the property market is in for a bigger correction than we have seen so far. However, I suspect this will be a smaller fall than the 18 year cycle would typically see and what happened post 1997 in HK. The existence of property cooling measures that can be removed have limited the speculation in the market, most people aren't over leveraged and I don't expect IR's to rise sharply. This was the experience in London post 2007 where the market fell 20% before rallying. This is the level at which I would expect cooling measures to be progressively removed from. If this is the case HK property would not represent good value compared to shares but given long run IRs that may be where equilibrium will be re-established? Shares in HK now starting to look good value to me over the long term. Lev

Van - I think we may have seen it (with the announcement that Iran's oil was back on the international market from a fundamental perspective), although from a technical perspective I would have liked to have seen oil bounce off support at $25. BP is making higher lows ATM but there is no price acceleration yet. Short covering I expect is the short term price driver as the small investors who have been shorting get stopped out while betting on $10 a barrel oil. However, I tend to buy into the idea that stocks are now in a bear market as the market has probably discounted the effects of lower commodity prices on a number of affected shares. How the dynamics play out between any commodities rebound and any stocks bear market should be interesting - maybe we will see a bottom for many commodities this year and the start of some inflationary pressure building albeit from a lower base? Lev

Some of the smaller players are going to default on their debts at these prices. That should put a floor under the oil price but cause problems elsewhere IMO. Bigger players with low gearing and plenty of cash on the balance sheet should be in a better position once the oil price stops falling

Brent crude touching $28 today - new low yet BP so far holding above long trend line (323p) at around 333p. I think BP will bounce hard if a floor can be found in the oil price. Chat rooms are full of small investors shorting the oil price - near term bottom coming in oil maybe? Epicentre of this crises seems to be moving from oil to Hong Kong over the past few days. I don't profess to understand all the issues involved but it seems to be about the yuan overvaluation. Russell Napier is well worth a read on this.

Sold out yesterday at 351p. Think BP will outperform the oil price going forward as oil spill costs are fully disclosed (but share price has not improved to reflect the full write down yet), it has strong refining part to its business which is less suspectible to the oil price and will be well placed to pick over the wreckage of the oil companies and pick up some bargains in due course. I expect it to cut its dividend to around 4%. Separately I read that extending 5th waves tend to correct back to the wave 2 level. If this is the case for oil we could be heading back to $22 per barrel albeit with some strong but short short covering rallies to come. The long term support for BP is at around 3.23p we may touch this level at a lower oil price. If this is the case the risk reward of buying will improve. Going to focus on this much more and will post how it goes going forward. Lev

I have taken a position in BP at around 328p. The mainstream media is screaming $10 oil and the oil gold ratio is at three standard deviations. I may be wrong but at least for the short term I would hope for a bounce in the oil price maybe from short covering that would make this a profitable trade. We'll see