Chinese bubble on the brink…..
Question to the world’s biggest property developer: Is there a bubble [In China]?
Answer: Yes of course.
Watch this video broadcast by CBS last week.
Watch here.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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Andy
:
People are obsessed with calling anything with soaring prices bubble.
Is bond a bubble? Gold bubble? Australian property bubble? Chinese property bubble?
Bubble can only be identified once it pops. Until then it is not a bubble. A classic example is tech bubble. The tech price went up 40% from when many commentors called it a potential bubble.
Is Chinese property a bubble? Who knows and who cares until it pops!
Roger Montgomery
:
Not sure I agree with you ANdy. James Chanos has a great definition for identifying a bubble ex-ante and so did John Kenneth Galbraith. John Kenneth Galbraith, in his book The Great Crash, wrote “As noted, at some point in a boom all aspects of property ownership become irrelevant except the prospect for an early rise in price. Income from the property, or enjoyment of its use, or even its long-run worth is now academic. As in the case of the more repulsive Florida lots [in a mid-1920s Florida land boom], these usufructs may be non-existent or even negative. What is important is that tomorrow or next week, market values will rise—as they did yesterday or last week—and a profit can be realized. . “.
Back in 2011 I wrote, “a bubble guaranteed to burst is debt fuelled asset inflation; buyers debt fund most or all of the purchase price of an asset whose cash flows are unable to support the interest and debt obligations. The bubbles to short are those where monthly repayments have to be made.”