‘No’ to property price speculation


Excessive Asian property price appreciation may be over for now

PEOPLE generally like to invest in properties. It is easy to understand you buy a house. It is a simple, tangible investment. It is long term and financing is usually easy. Most people tend to have positive experience after buying their first home, which normally would appreciate after a decade or two.

Simple things can morph into complex series of events. Buying houses may turn to speculation, massive speculations become a boom and bust “housing bubble”; banks may collapse from huge bad mortgages, a financial crisis and then a government bailout ensues, an economic recession soon follows. These events sound a little too familiar.

Low interest rates, massive liquidity and investors shying away from volatile stock markets, are some of the many reasons cited for Asia’s potential property bubbles today. From 2009 or so, private residential properties have seen large average price jumps in China (Beijing +100%), Hong Kong (+53%), Singapore (+53%), Malaysia (+21%) and Indonesia (Jakarta +14%).

Asian policy makers have taken many pre-emptive actions to control this property “bubble”, usually by regulating excessive speculation and guiding mortgage lending by banks. In Hong Kong, policy makers try to discourage speculators by raising special stamp duty for short term resale of residential property (5% to 15%, depending on holding period); in Singapore, measures include a hefty extra 10% stamp duty on purchase price for non-residents. In Indonesia, there’s a maximum 70% property loan limit.

Recent data suggest such curbs did not slow the Hong Kong or Singapore property markets for long. Transactions or prices picked up again recently. We believe however, if Asian property prices rise rapidly again, tougher curbs may be in the cards. The slew of increasingly tough measures in China the last 18 months is seen as an example. An avalanche of curbs eventually made China home prices dip for eight straight months up to May 2012.

Historically, financial crisis in many countries (Japan 1991, US 2008 and Spain today) are caused by property price bubbles bursting hurting consumers, banks and businesses. Therefore, it makes a lot of sense to have responsible lending.

Asian policy makers, having learned bitter lessons from the 1997/98 financial crisis, sees pre-emptive measures to control any potential property “bubble” as crucial to avoid banking problems or crises.

Governments in Asia on the one hand want to curb excessive price speculation, while at the same time, know that home ownership is a very important (and personal) issue notwithstanding it is also a big contributor to domestic economic growth.

What Asian policy makers aim to do is best captured in a Chinese phrase, which literally means “in peace time, think about danger”. The best time to prepare for rainy days is when the sun is shining it’s a lot harder to do so in a storm.

The biggest challenge for policy makers is to develop a sustainable property sector and promote home ownership (especially first time house buyers) without boom and bust. That includes the balancing act of curbing property speculation without inadvertently pulling the brakes on the economy.

Some Malaysian non-listed property developers I met recently have expressed deep concerns that sales of their high-end, new condominiums are lagging, because buyers find it difficult to get financing.

Bank Negara‘s curbs on lending for third property mortgage (maximum 70% financing) and stricter banks credit standards appears to be working for now.

The intent of Bank Negara, we believe, is to nip excessive property price speculation in the bud. Current property curbs ensure at least prices don’t run up too fast and banks may allocate more funds to first time house buyers rather than investors or speculators.

Interestingly, property developers who don’t complain about curbs are often the established ones who prefer sustainable growth, rather than a boom and bust property market. I believe many property companies have learnt not to borrow too much.

Tellingly, the top five Malaysian listed property developers have reduced average net gearing from 70% in 2000 to 18% in 2011, (Indonesian and Thai property developers reduced from 612% to 9% and 255% to 84% respectively). Asean property companies today are undoubtedly less leveraged with healthier cash reserves.

That’s one reason why most property developers in Malaysia, Indonesia and Thailand for example, are not rushing to unload properties at massive discounts, even as property curbs bite into sales. They know current measures are temporary and consumer demand is likely robust for quite some time.

Asian consumers are financially better off today. Healthy employment and wage increases across Asia means consumer demand for housing will likely stay buoyant and house prices, like in normal times, will gradually rise over time.

However, the intriguing impact on Asian properties today given the mind set and propensity of policy makers to pre-empt any potential property bubble I believe periods of excessive property price appreciation in many Asian property markets may already be over for now.

I believe policy maker’s curbs on excessive price speculation is a right policy. Even if there’s short-term pain, it will likely make Asian economic growth sustainable for the longer term in these difficult times.

Singular Vision
By TEOH KOK LIN

 Teoh Kok Lin is the founder and chief investment officer of Singular Asset Management Sdn Bhd.

China Manned Space Mission successful


The Long March-2F carrier rocket carrying China‘s manned Shenzhou-9 spacecraft blasts off from the launch pad at the Jiuquan Satellite Launch Center in Jiuquan, northwest China’s Gansu Province, June 16, 2012. (Xinhua/Li Gang)

JIUQUAN, June 16 (Xinhua) — Commander-in-chief of China’s manned space program Chang Wanquan announced Saturday that Shenzhou-9 spacecraft had accurately entered its orbit, calling the spaceship launch a success.

Space.com: You can watch China’s Shenzhou 9 launch live online via the state-run CCTV news channel here: http://english.cntv.cn/special/shenzhou9/index.shtml

FULL VIDEO: Shenzhou-9 blasts off CCTV News – CNTV English.

We have lift off! China sends woman astronaut into orbit in most ambitious space mission yet

  • New hero for a billion people as China’s first female astronaut successfully enters space
  • The 33-year-old is with two male astronauts on a mission to the ‘Heavenly Palace’ space station
  • The astronauts are now orbiting at 213 miles above Earth and expected to reach the space station on Monday
  • Analysts say China’s exclusion from the ISS, largely on objections from the United States, was one of the key spurs for it to pursue an independent program 20 years ago

By Lawrence Conway

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China sets new record submersible deepest seas dive


Chinese sub dives over 6,000 meters

ABOARD XIANGYANGHONG 09 – China‘s manned deep-sea submersible Jiaolong and three divers inside are rising from over 6,000 meters below the sea in the Mariana Trench after setting the country’s dive record on Friday.

China’s manned deep-sea submersible, Jiaolong, is unmoored from its mother ship before making its first dive in the Mariana Trench, as part of a bid to go to depths of up to 7,000 meters, June 15, 2012. [Photo/Xinhua]

The dive, which began at 9 am local time Friday (2300 GMT Thursday), is the first of a series of six scheduled ones.

The dive went smoothly and cost about 3 hours for the Jiaolong to reach the depth of 6,000 meters at 12 pm local time (0200GMT), which far surpassed the 5,188-meter record it made last July.

The three divers Ye Cong, Cui Weicheng and Yangbo inside the vessel wished China’s Shenzhou-9 spacecraft launch a success from 6,055 meters below the sea.

The Shenzhou-9 manned spacecraft Thursday completed its final full-system drill before its planned launch in mid-June.

The Jiaolong threw ballast iron and began to rise at 12:44 pm local time (0244 GMT).

So far, the three drivers and the Jiaolong itself have been OK.

There was something wrong with the submersible’s No 1 communication system, but the No 2 set is working soundly to guarantee the connection between the vessel and Xiangyanghong 09, its mother ship.

The rise is expected to last three hours and the on-scene dive headquarter will timely release the diving information.

The Jiaolong, depending on local weather and sea conditions, will try another five dives, deeper and deeper, in the coming days. The fifth and sixth are scheduled to challenge the depth of 7,000 meters.

The six dives, each of which may last eight to 12 hours, will test various functions and performances of the manned submersible at great depths.

Experts say, for safety, sea dives can only be conducted in daylight under no-more-than-four-class wind and no-more-than-three-class wave.

The Xiangyanghong 09 ship reached the designated dive zone in Mariana Trench on Monday morning.

China’s manned deep-sea submersible, Jiaolong, is hung up before making its first dive in the Mariana Trench, as part of a bid to go to depths of up to 7,000 meters, June 15, 2012. [Photo/Xinhua]

Submersible sets new China dive record

The "Jiaolong" craft descended to a depth of 6,000 metres in the Mariana Trench in the western Pacific Ocean

Enlarge

File photo of the Chinese submersible “Jiaolong”. The manned Chinese submersible on Friday set a new record for the country’s deepest ever sea dive at 6,000 metres (19,685 feet), state media said.

A manned Chinese submersible set a new record for the country’s deepest sea dive Friday, over 6,000 metres, showing Beijing’s technological ambitions as it also readies for its first manned space docking.

The “Jiaolong” craft dived over 19,685 feet into the Mariana Trench in the western Pacific Ocean, the first in a series of six dives which will plumb depths of 7,000 metres, the official Xinhua news agency said.

The deep-sea dive push comes as China prepares to launch a spacecraft on Saturday to conduct its first manned space docking, as part of efforts to establish a permanent space station by 2020.

The submersible, which carried three men, reached around 6,500 metres with only a technical glitch in communications, state media said.

“In our first battle, we have already reached 6,500 metres. All of our tasks have been completed,” chief commander Liu Feng told state television aboard the ship carrying the submersible.

He said a piece of communications equipment on the surface of the water failed, but the team switched to a back-up system and restored communications. He did not say whether contact was completely lost with the Jiaolong.

The same vessel — named after a dragon from Chinese mythology — reached 5,188 metres in a Pacific dive last July, the nation’s previous record.

Friday’s dive sparked outpourings of nationalism on the Internet and comparisons to the upcoming space launch.

“Three pilots will take the Jiaolong to attempt the 7,000-metre dive, while three astronauts will take the Shenzhou-9 to connect with the Heavenly Palace,” a Shanghai based blogger wrote on his microblog.

“Up in the sky we can pluck the moon, down in the oceans we can catch the turtles,” said the posting on Sina’s microblog service, quoting a saying attributed to late Chinese leader Mao Zedong.

Experts say China intends to use the submersible for scientific research, such as collecting samples of undersea life and studying geological structures, as well as future development of mineral resources.

But one Chinese expert on Friday described the latest dives as an “experiment” for China and said future use of submersibles for scientific research faced obstacles, such as with stability and durability of the craft.

“Even after it reaches the 7,000-metre depth, it still remains a question whether it can achieve scientific purposes,” Zhou Huaiyang, professor of the School of Ocean and Earth Sciences at Shanghai’s Tongji University, told AFP.

Scientists say the oceans’ floors contain rich deposits of potentially valuable minerals, but the extreme depths pose technical difficulties in harvesting them on a large scale.

- AFP  Newscribe : get free news in real time

Related post:

 China achieves double record-breaker: Sky-high and abyss-deep sea!

South China Sea Islands Dispute; US won’t take sides


Beijing rejects island dispute comments

Beijing on Tuesday criticized Manila‘s attempt to expand the Huangyan Island dispute over the entire South China Sea and rejected Manila’s accusation over the freedom of navigation.

Huangyan Island has been an integral part of China’s territory since ancient times, and the Philippines‘ groundless claim over the island’s sovereignty is “the fundamental cause” of the complicated situation, Chinese Foreign Ministry spokesman Liu Weimin said.

His remarks were made in response to Philippine Foreign Secretary Albert del Rosario, who accused China on Monday of “claiming virtually the entire South China Sea”.

“Expanding the Huangyan Island dispute to involve the entire South China Sea makes no sense,” Liu said at a daily news conference.

Also on Monday, the foreign secretary said “the message is” that China “can set the rules for anybody”.

“I think the current standoff is a manifestation of a larger threat to many nations,” del Rosario told ABS-CBN TV network in an interview.

Philippine Department of Foreign Affairs spokesman Raul Hernandez also said that China is posing “a potential threat to freedom of navigation as well as unimpeded commerce in the area”.

Beijing on Tuesday responded that freedom of navigation in the South China Sea “has never been an issue”, and China’s long-term exercise and protection of sovereignty over the island “has never and will not influence” freedom of navigation in the waters.

On the contrary, Manila’s recent decision to send a warship to the island and dispatch personnel for a forced inspection of Chinese fishing boats triggered the existing tension, said the Chinese spokesman.

“Manila’s moves unavoidably gave rise to massive concerns over security in the related waters,” Liu added.

Yang Baoyun, a professor of Southeast Asian studies at Peking University, said Manila’s current remarks and stances “show few signs of sincerity” to resolve the dispute.

No country is allowed to misuse international laws to serve its interest, Yang said, adding that Manila did not lay territorial claim to the island until 1997.

Hernandez also said on Monday that Manila planned to exchange views with Washington on the island dispute during the upcoming “2+2″ US-Filipino talks, scheduled to start on Monday.

“Generally, a country does not take sides on other countries’ sovereignty disputes. And we have noticed that none of the other countries has taken sides on the issue,” said Liu, the spokesman.

Manila’s standoff against Beijing in the waters of Huangyan Island entered its fifteenth day on Tuesday.

On April 10, 12 Chinese fishing boats were harassed by a Philippine warship while taking refuge from harsh weather in a lagoon near the island. Two Chinese patrol ships in the area later came to the fishermen’s rescue, and the warship left.

The Chinese fishermen returned home, but the standoff remains. There were still two Philippine vessels and one Chinese ship in the waters on Tuesday.

Xinhua News Agency on Monday reported that two Chinese vessels, a Fishery Administration ship and a Chinese Maritime Surveillance ship, left the area on Sunday.

“The withdrawal of the two ships proves once again that China is not escalating the situation as some people said, but de-escalating the situation,” said Zhang Hua, spokesman for the Chinese Embassy in the Philippines.

China is ready to settle this incident through friendly diplomatic consultations, Zhang added.

(Source: China Daily)

US won’t take sides in South China Sea dispute

Updated: 2012-05-02 12:24 By Zhao Shengnan (China Daily)

The United States said on Monday that it would not take sides in the Huangyan Island standoff between China and the Philippines in the South China Sea and reiterated support for a diplomatic resolution to the territorial dispute.

Washington does not take sides on competing sovereignty claims there, but has a national interest in maintaining freedom of navigation as well as peace and stability, US Secretary of State Hillary Clinton said, after meeting top diplomatic and defense officials from the Philippines.

Philippine Foreign Secretary Alberto del Rosario and Defense Secretary Voltaire Gazmin attended the 2+2 dialogue with their US counterparts, Clinton and Leon Panetta, in Washington.

“The United States supports a collaborative diplomatic process by all those involved for resolving the various disputes that they encounter,” Clinton said. “We oppose the threat or use of force by any party to advance its claims.”

Gazmin alluded to tension with China over islands in the South China Sea as he called for the need to “intensify our mutual trust to uphold maritime security and the freedom of navigation”.

“We should be able to work together to build a minimum, credible defense posture for the Philippines, especially in upholding maritime security,” Gazmin said.

The Philippines and China have been embroiled in the Huangyan Island dispute, with both nations stationing vessels there for nearly three weeks to assert their sovereignty.

China on Monday highlighted remarks made by the Philippine president about de-escalating the tension over the island, urging the Philippines to “match its words with deeds” and return to the proper pathway of diplomatic solutions.

Speaking of the tension, Philippine President Benigno Simeon Cojuangco Aquino III said he had issued instructions to his military, telling them not to intensify the issue.

Chinese Foreign Ministry spokesman Liu Weimin stressed that there is no change in China’s stance of using diplomatic channels to peacefully resolve the issue, which was triggered when a Philippine warship harassed Chinese fishermen and raised concerns over China’s sovereignty of the island.

The Philippine officials also stressed diplomacy when asked what aid they had requested from Washington, saying that Manila sought to bring the South China Sea issue to international legal bodies.

Clinton reaffirmed the US commitment to the 60-year-old Mutual Defense Treaty with the Philippines, calling the Philippines a country “at the heart” of the new US strategy toward the Asia-Pacific.

Washington would help improve the Philippines’ “maritime presence and capabilities” with the transfer of a second high-endurance (coast guard) cutter this year, Panetta said.

The US emphasis on neutrality and a diplomatic resolution would encourage Manila to be more restrained on the Huangyan Island issue, said Fan Jishe, a US studies expert at the Chinese Academy of Social Sciences.

“Washington doesn’t want territorial disputes between its Asian allies and China to be obstacles to China-US relations,” he said.

Xinhua and Reuters contributed to this story.

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