drbubb Posted September 8, 2008 Report Share Posted September 8, 2008 CHART & COMMENTS- Relating to the Cycle in HK Property Prices ============== From 3.Apr.2009 Conference Call ... update I think these graphs prove my point... The LT graph really goes out of phase/sync towards the end.. I'm guessing the 18yr cycle probably fits this better than all the other combinations.. but if you play like that, you're bound to find a pattern. SURE. They wobble, stretch and contract somewhat. The point of the cycle is that it provides a narrative, or storyline, and if the facts fit in with the storyline, then you have an idea of what lies ahead. In the UK and the US, the 18 year cycle worked well, it nailed the top- particularly if you used it together with other indicators, like Builder shares. Here are two YouTube videos which I have made which illustrate the point. 1/ Introduction to Harrison's 18 year cycle: :: 2/ Are the UK Builders forecasting a Property Crash, starting in 2008: :: Let's apply these tools to the HK market. Here's how I do that: (The last 18 year Cycle peak was in 1997, after a 13-14 year rise): raw chart There was a drop into 2001 and 2003, and since then... update + We saw a major peak in Hong Kong in 1997 + The next Low should have been 2001, there was an "attempted low" then, but + SARS brought a lower low in 2003 + 7 years up from "natural low" of 2001, suggests a mid-cycle high in 2008 + After that, you would expect "several months" of correction, coming along with a recession + The 4 years "explosive phase" lies ahead, into 2012, and then maybe: + 3 years of the Winners Curse phase (possibly 2012-15), when the banks "throw away the rule book" The 18 year pattern is so pronounced, that it seems to have over-ridden timing of the 2003 SARS low. My big fear is that disruptions in the US, like a depression, or a surge in interest rates in an inflationary episode might overide the cyclical narrative that I have described above. Why do I think this current correction in HK is just a "mid-cycle correction" expected to last a few months? - We did not see the signs of excess (in overbuilding, over-finance, and speculation) that are typical at peaks - I read somewhere that something like 50% of HK own their properties outright- without debt. You would .. expect them to be stretched and over-borrowed at an important peak (as there were in 1997) - The HK builder/developers have already shown a substantial correction in their share prices Henderson Land (HK:12) ... update : http://tinyurl.com/5aclqn ..HSNP ... showing a pattern similar to the previous mid-cycle correction, before the run-up into 1997 HK:12, updated to early April 2009 ... update I find it interesting that Chinese stock indices are now nicely based, and ready for a possible move up. The China stock etf (FXI) ... update: http://tinyurl.com/ChinaFXI : mid-2008 HK Stock Index etf (EWH) - updated late Sept.2008 ... update (I will copy this to the GEI property thread, to continue the discussion there. Those here who are unfamiliar with this way of thinking, may find it difficult to accept this way of thinking, but I can assure you that it has been successfully applied by Fred Harrison and others.) Originally posted: http://caribbeancoast.org/forum/index.php/...56.html#msg4556 HIBOR : LINK Here's US$Libor - remember the "upside-down" way this contract is quoted: 100 - the Libor interest rate (1 mo. libor??): $LIBOR ... update CSI-300 Stock Prices ... http://tinyurl.com/CSI-300 The CSI 300 Index is a cap-weighted index. The index tracks the daily price performance of the 300 most representative A-share stocks listed on the Shanghaior Shenzhen Stock Exchanges. The index was launched on 4/08/2005 and has a base of 1000 on 12/31/2004. Historical pricing is not yet available. Index trade volume on Q is scaled down by a factor of 1000 Looking at the chart for Shanghai/ CSI-300 ... update up to 20.2.2009 Property Bellwether for Chinese property? China Overseas L&I (HK:688) ... update : 1 year : 20.2.2009 It is one of the older quoted property co's - so has more past track record than most HK's Population ========== 1961 : 3.19 mn 1971 : 4.10 mn 1979 : 5.02 mn 1994 : 6.12 mn 2008 : 7.01 mn "optimal size" is 10 mn - said Donald Tsang in 2007 (FT interview) = = = = = LINKS: Square Foot website... : http://www.squarefoot.com.hk/section/magazine-this-issue/ The Standard, HK site : Sing. & HK news......... : http://propertymarketupdates.com/category/...erty/hong-kong/ Link to comment Share on other sites More sharing options...
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