Friday, 19 November 2010

Back From Nanjing City, Jiangsu Province, China.

Hi there, visitors to my blog.

I am back from my annual retreat in Nanjing and hopefully afresh and ready to put up some interesting postings again. During this short break, I note there is still a sustained stream of visitors to my blog which is most encouraging.

I hope with this short break in China will help  me to do some interesting postings here, both on the Property Investment Trap and other sideliners, with a perspective from the external business environment of the world's emerging largest economy, just as China unveiled its growth plan during the recent G20 Summit in Seoul; amidst its rampant inflation CPI currently at 4.4%.

China's Vice-President Xi Jinping had just visited Singapore last Sunday, his first overseas trip since a key military promotion last month, and presided over the groundbreaking of the China Cultural Centre (located at 217 Queen Street in Singapore's Arts and Heritage District). Is this the only way for cultural exchange since SM Goh said that ties between Singapore and China are more than just political and economic? There is always another side to every good view which I hope to present here vividly.

I was watching U Channel Chinese News last night after a 3-week break. There was highlight about "insurance and safety" for a primary school's coming study tour to China. The young innocent kid was proudly interviewed and she said the trip would be "helpful" for her to understand what is the "actual Chinese Language" - I guessed she meant "properly spoken" Chinese language. If I were to face with such a situation in China, I would be totally embarassed. It seems strange that we (as Chinese) have to send our students overseas to another country to learn and understand what is "proper" Chinese language and culture. Something must have been wrong with our values and educational system since gaining independence. I recall there was once a portfolio of "Minister of Culture" while MM Lee is still so proud about our "success" for our 2nd Language education policy. Anyway, I hope to add some interesting sideliners in my postings soon.



Note : In my rush to do my lasting posting before my annual retreat, I had no time to do a final edit before posting. I had made some typo errors. I hope if you had read in between the lines, you would have had picked them up. My sincere apologies. Obvious - next likely property boom in 2015 instead of "2005". I have corrected it.


  1. Hi Mr Yak what is your opinion about the bust? Will it be a short one or we could suffer the same fate as US and Ireland with the illusion of housing as a safe asset being shattered? If it is a long term one buying in 2015 might not be the best investment assuming it bust in 2013. Maybe wait until 2017-2018 when it really hit rock bottom could be better?

  2. Hi James

    Thanks for your interest in this topic. I also noted your comment in my last posting which I had problem addressing while in China as Blogger is banned. I would provide a simple reply here first and perhaps explain more in a separate posting later on.

    First, let me re-phrase what you asked in a different context. You asked for my opinion on the "bust", presumably what I predicted for 2012~2013 after the bursting of the China Bubble. Will it be a short one or will we be like US & Ireland? I predicted the bust would follow China; and considering a shorter biz cycle of abt 5 years. For S'pore it would be "short", if China leads Asia again in recovery mode after its bust.

    I do not think S'pore's pty mkt will be depressed for long duration like the US, Japan for years. This is because their depression and stagnation of their pty mkt was related to the collapse of their financial system. {S'pore is safe-guarding}. I believe same for Ireland. [I will write separately on the Japan mkt in a later posting.] I do not think US will "pull" the next global recovery. I believe they will "push" China & Asia and continue to make "noise" economically. The US problem is too huge and complex - jobs, financial system, BOP and trade deficit, trillion debts... alot of re-structuring required. China is a totally different economic animal, the world cannot just simply "swap" US & China and expect China to become the World's No 1 leading economy overnight. But I would still watch China as an "external" driver. Having just returned from China and sized up their pty & stock mkt, I will write more in a separate posting.

  3. Hi James
    Part 2

    I like the last part of your question above. You ask me about "buying" and "when" and it relates to the short vs medium term investment decisions. I believe you follow what I said before about pty investment timing. The buying decision and timing is more decisive in targetting for asset appreciation and profits, unlike in stocks where "when to sell" is more important decision in deciding whether you will enjoy profits.

    I will simply address in 2 parts.

    (i) Short Term - Bust, say 2012 ~ 2013. A pty bust often follow "severe" economic events, and slower than stock market / forex collapse. So you rid your shares first and some of the cash will follow to pty and so the pty mkt will not consolidate overnite so much. So you exit from short-term profit taking and shift to long term investment. I just observed and collected feedback from China during my retreat. Despite different recent "control measures" in S"pore, China and HK; the volume fell a lot but price consolidation not that much yet. So the "buy" should be time after the consolidation in price. If you recall, I mentioned why the HDB resale price index defied a severe correction in the 2008-2009 as compared to the PPI which is what complain about HDB affordability issue is all about. I am also sketical that the PPI will behave like the HDB RPI in the present global economic condition. Hence, I predicted a bust, before a "boom" around 2015 considering a shorter biz cycle...that will be also when you may see the sudden hike in prices for the BT Timah "Condo Belt" when the DTL 2 MRT will open as scheduled. Rentals will also jump. There is also a huge "good-class" land bank currently "land-locked" by the Malaysian KTM rail tracks, bounded by the Hollad Rd / BT Timah & Clementi Rd axes. The Govt acquired them at dirt cheap prices decades ago.

    Buying at 2015 may be too late. If "bust" around 2012~2013, then perhaps buy at 2014. The actual timing,watch price consolidation and external economic drivers...and I will watch China first. My other minor "check" now is the sudden event in the Euro Zone now ... with Ireland.

    The last part of your query - "Maybe wait until 2017-2018 when it really hit rock bottom could be better" - This is that you assumed a longer than expected "depression" due to the external business enironment. Again, I think S'pore pty mkt will not depressed for a long period like US & Japan, unless the global economy first depress likewise. There will only be severe vs minor price consolidation particularly for the higher classes of properties. S'pore banged on a "premium" branding to bring in foreign pty investors...and MBT will keep on releasing lands and make easy money from land will the next MND Minsiter if MBT is kicked out in the next GE or a chnage of portfolio. The developers will join him. The buyers will "suffer" if timing is wrong and poor HDB upgraders get sucked into the lower DBSS & EC sub-markets.....For 2017 ~ 2018, which is medium term, it just guide decisions. Buying decisions is still short-term (look at 2012~2013 first,or say up to 2015 about one short biz cycle)and watch external drivers. Unless you are a highly -leveraged investor aimimg for "long-term yields" through rentals.

    You see for the long-term, our Govt will want to profit from land sales...same for developers for developmnents. It is a SUPPLY side decision. They make money. Price consolidation is very much a DEMAND side related issue. We spend money. Watching price consolidation is it for right timing.

  4. Hi James
    Part 3

    Lastly, as I said stock market will "bust" first, then price consolidation in pty mkt. Take stock mkt as cue.

    To support S'pore "premium branding strategy", the Finance Minister just confirmed what I highlighted and commented before my trip - why appreciate S$ and lower SINBOR. S'pore implement control measures to "safeguard" our financial system (our banks). If foreigners can afford to pay the more expensive properties here after S$ apprecaition, they are welcomed to dump their money here but the GOVT will "lock" them here with control measures while making from land sales generally. As what Tharman said in Parliament, the Govt "is not contemplating introducing capital controls, but will continue to rely on a wide range of policy tools to ensure that capital flows do not threatened financial stability or cause a property market bubble" ... and I take it as leaving the pty mkt door open first and then locked them in. But like in a currency war, the "own friendly forces" will suffer most.

    Hope I have addressed your questions. Still a long message but I have not substantiate it, unless I do it as a posting.

  5. "Nice" Advertisement By Inflation US - "The Day The Dollar Died"

    "The following is a fictional story of events that may happen in the near future..."

    A “no-holds barred” FICTIONAL account of QE4

    Note The Date : December 19, 2012.

  6. Read Lucky Tan's posting about the Ireland Bubble here :-

    Note 1 : Generally, our PPPI was behaving the same. Except the HDB Resale Index defied a fall in 2006~2007. My take was land sale price was chasing high construction costs then.

    Note 2 : "the speculators and developers in Ireland became very confident that prices would keep rising because Ireland had an open door policy" ... our Govt policy is behaving the same although the MAS just issued warning about low SINBOR and risk of "ffordability" when interest rate shoots up in future. Contradictory policies?

    Note 3 : "There was no period in the Irish housing bubble when prices rose as rapidly as they did in Singapore in the past 2-3 years when housing prices rose by more than 70%" - Lucky Tan was not specific; but I take him to mean the HDB Resale Index, as his graphs are clear. PPPI had a fall (2008) like in Ireland then shot up again.

  7. Full link should be :

    "Slaying of Celtic Tiger"

  8. Hi Mr Yak, thanks for your substantial reply. Your analysis is very good and i will surely take note of it if i ever need to purchase a property. However, just to comment, i am not that confident that sinagpore has done enough to prevent some major fallout from the collapse of the financial systems from the west. The "The Day The Dollar Died" is precisely one of many black swans that could have devastating effect on singapore. If singapore is smart like some of the BRIC countries in increasing their gold reserves then i will be more assured but as of now i did not see any public announcement of any buying by singapore's MAS.(secret buying might be done but we would not know anyway)

    Another big worry is that i believed in the substantial inflation in food and energy prices until that it will affect the world economy including singapore. I subscribed to the view that part of the reason for the 2008 crash was due to the huge oil shortages then leading to the high oil price. My view is that this oil price escalation will continue in this coming decade in an undulating fashion. When oil price increase too much recession occurs which depress the demand for the oil but as the world recovers, demand will force the oil price to escalate and again will force another depression. This is my view for the next two decade with each recovery becoming increasing smaller.Hence to profit from this might become increasingly difficult.

    Nonetheless i think your analysis of BT Timah "Condo Belt" and "good-class" land bank currently "land-locked" by the Malaysian KTM rail tracks, bounded by the Hollad Rd / BT Timah & Clementi Rd axe is spot on and i think will be the last time for any price appreciation gamble to succeed.

  9. Hi James

    @ "i am not that confident that sinagpore has done enough to prevent some major fallout from the collapse of the financial systems from the west".

    Singapore is just "Alex" but trying to shock the World ... trying to lead currency appreciation? LOL. Singapore has no "pulling" power. Nothing better to do better follow North Korea KJI's father & son team.

    My take unless Eurozone becomes real shit, I still prefer a take by Jim Rogers on the China Bubble - That at most, the pty price will consolidate and pty bubble burst, but the whole China economy will not go bust, and perhaps prop up the world economy. But demand is stiil domestically driven and will be focussed more on commodities.

    Perhaps that's why in the FICTIONAL account of QE4 "Advert" - other c'tries want to keep RMB too.

  10. Hi!

    Apologies, I must have missed the reasoning behind why there may likely be a 2012-2013 bust (before the 2015 boom.) Is it possible to place a link to this analysis?

    Also, if such a bust were to occur, what is its likelihood of affecting HDB prices? 2008 being a precedent where HDB prices did not fall in synch with private prices when economy had fallen.

    Thanks and looking forward to response.

  11. Hi CarpeDiem

    (c) In between the cycle booms and busts is a period of about 5 years with the property play always focussed more on a particular property class with intermittent supporting play of the HDB resale market in tandem as the upgrading class. Will the next boom then be in 2015? And will there be a severe correction or even burst of the bubble between 2012 ~ 2013? Now following the 2003 SARs crisis, the annoucement of the IRs then boosted property prices and boosted it to reach the 2008 Peak, with rising steel prices; while the China economy impressed to become the World's No 2. It is also a period that Singapore capitalised on cheap and abundant labour resources from China. Given the post Financial Tsunami scenario as equivalent, if not greater in impact to the SARs crisis; will the next severe correction or burst of our bubble then come with the burst of The China Bubble around 2012 ~2013?

    [Note : read the post which carried other links -graphs]

    Part XI 24 Oct

    Link :-

    @ "if such a bust were to occur, what is its likelihood of affecting HDB prices?"

    You answewred part of the Qn "2008 being a precedent where HDB prices did not fall in synch with private prices when economy had fallen.". Who engineered this ? LOL.

    The private properties "corrected" once and then climbed. The HDB did not but climbed all the way. Who will have a greater fall? Who is now holding the "musical box" at high prices while the "upgraders" might have crossed over to join speculation in the private pty mkt ? What will happen when the private pty mkt burst too ... if more "hot" capital flows in ? External drivers to watch?

    You tell us.

  12. Hi Mr Yak,

    Thanks for your quick response.