from Seeking Alpha site

Monday, November 21, 8:40 PM The level of property transactions in China’s largest cities – down 39% Y/Y in October – has fallen well below the worst case scenario of stress tests carried out by banking regulators last April. An analyst who has seen the test documents says neither they nor the banks had enough appreciation of the extent to which loan collateral is tied to the value and turnover of real estate.

 

We interact with a Chinese team of Engineers and Managers on a daily basis plus making physical trips to China.  What we’ve learned is that over the last couple of years is that China has a simple loan approval process .. first house you can get 100% loan, second 50% loan, third 0% loan.  And that rule is for serial or parallel purchases.  It was instituted to keep a runaway real estate bubble away.  It seems to be working rather well, doesn’t it?… It does play havoc with the statistics though, caution about being mislead.

 

 

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