Wenzhou woes are warning for all to see; even the loan shark market is stretched, and the nationwide liquidity shortage in June made the situation much worse

September 26, 2013 Leave a comment

Wenzhou woes are warning for all to see
Thursday, September 26, 2013
Data show that among 70 major Chinese cities, 69 saw home prices rise in August year-on-year. In first-tier cities – Beijing, Shanghai, Guangzhou and Shenzhen – prices jumped 18 to 20 percent, and in second-tier cities, 7 to 10 percent. Where did prices fall? Wenzhou, Zhejiang province. Known as the birthplace of China’s private economy, Wenzhou boasts numerous entrepreneurs making electrical equipment, chemicals, medicine, building materials and textiles. With their wealth, some of the businessmen turned to speculation. Data show that home prices in Wenzhou peaked in early 2011, and since then, have plunged 26 percent. The city faces three major woes. Debts have soared at local firms amid the economic slowdown in America and Europe. Secondly, even the loan shark market is stretched, and the nationwide liquidity shortage in June made the situation much worse. Third, the property market bubble burst, and it is China’s only city permitted to float policies to boost home purchases. Even Wang Shi, chairman of the mainland’s largest developer, Vanke, has warned the nation’s property bubble is similar to that of Japan in the 1980s. Will anybody listen to him? Dr Check and/or The Standard bear no responsibility for any decision made based on this column.

Filed under Macro Trends

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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