Showing posts with label Hong Kong. Show all posts
Showing posts with label Hong Kong. Show all posts

Friday 24 April 2015

Why Shanghai and Hong Kong are the world's cheapest sharemarket 'bubbles'

A 25 per cent surge in Hong Kong-listed shares has investors worried the market is running too hot.
A 25 per cent surge in Hong Kong-listed shares has investors worried the market is running too hot. Photo: Bloomberg
When the price of any market doubles in the space of 12 months (like the Shanghai Stock Exchange's benchmark index), or jumps by almost a quarter in a matter of weeks (like its Hong Kong equivalent), the temptation is to write them off in one word: "bubble".
But can a sharemarket trading on a price-to-earnings ratio of 10 be considered to be in a bubble? That's the Hong Kong-listed stocks in both the Hang Seng Index and the Hong Kong China Enterprises index.
If the answer is "yes", then Mammon help local investors who are ploughing money into the Australian sharemarket, which trades on a nose-bleeding forward P/E of 16.
Ah yes, you say, but look at the mainland Chinese sharemarkets. That's where the full weight of irrational exuberance is on display. The Shanghai Composite Index now trades at 18 times estimated earnings for this calendar year, on Bloomberg data. Once again, the move has been dramatic, but the resulting valuation less so. The Shanghai index is about the same as the S&P 500 index, but well below the multiple of 28 investors are paying for the US Russell 2000 index.
"On an absolute basis, the valuations of these markets are not expensive, nor are they if you benchmark their P/Es against the US, Japan, Australia, or even Europe," Joseph Lai, who manages Platinum Investment Management's Asia Fund, says.
HSBC's head of Asia ex-Japan equity strategy Herald van der Linde doesn't see a bubble in Chinese shares, also pointing to valuations that have expanded fast but from very low levels. He remains "overweight" China, although he does add that some air might come out of the stocks that have run particularly hard.
"We like the financials sectors, banks and property companies, on the back of the lower interest rates we see in China," van der Linde says. "We also see infrastructure projects, such as those happening on the old silk road, benefiting infrastructure companies in China."

New money 

What has been particularly exercising pundits is the fact that the surges on the Shanghai and Shenzhen exchanges, and more recently in Hong Kong, are the result of a wave of new money from individual Chinese investors who look to be punting on a government-sanctioned boom in share prices, and often doing so on borrowed money.
"In our summer last year we started seeing in the Chinese media almost educational pieces encouraging mainland investors to get back into the sharemarket," Catherine Yeung, a Hong-Kong based investment director at Fidelity Worldwide Investment, says.
But this also needs to be put in context. After years of losing money, "mum and dad" investors in China had largely abandoned the sharemarket, often in favour of the property market. Exchanges in Shanghai, Shenzhen and Hong Kong essentially stagnated from late 2011 to 2014, as the chart shows.
Then in November the Chinese government announced reforms that made it easier for foreigners to invest in the Shanghai exchange and for mainlanders to buy Hong Kong-listed mainland businesses.
About the same time, policymakers began stepping up measures designed to stimulate a flagging economy. Chinese mums and dads began starting to take notice of the sharemarket, which was showing signs of life for the first time in years. They began to pile in.
The crescendo looks to have been reached in March, when retail Chinese investors opened about 4.2 million brokerage accounts, triple the number in February and taking the total number of new accounts this year to about 8 million. That's more than were opened in 2012 and 2013 combined, Fidelity's Yeung says.
A change of rules around Easter that gave Chinese mainland fund managers more access to Hong Kong-listed shares sparked a buying frenzy, as southbound money poured into the island's sharemarket and local investors jumped in to front-run the flow of money.

Daily turnover

The average daily turnover on the Hong Kong stock exchange tripled in short order, from an average of $HK87 billion ($14.47 billion) to $HK231 billion between April 8 and April 21.
More recently, regulators announced measures to rein in margin lending, which has been taken up enthusiastically by mainland investors.
"The ultimate aim of the government is to create a slow bull market rally," Yeung says. "It's very hard to change the behaviour of an investor who is set to go two ways – either a strong rally or sharp correction. That is the conundrum."
Lai says there has been some particular exuberance among Chinese small caps, but the larger names remain good value.
He points to a name like SAIC Motor Corporation, a joint venture between Volkswagen and General Motors and "a big company that sell millions of cars in China". The Hong Kong-listed stock is up 86 per cent over the past year, but trades on a P/E of 9.5. Or the giant China Mobile, which is the dominant mobile telco provider in China, with more than 800 million subscribers. It trades on eight times cash flow, Lai says, and that's after having jumped 65 per cent over the past 12 months.
A bet on China is also a bet that the government can continue to reform and rebalance the country's economy and steer it towards a more sustainable future.
"If economic reforms can continue to progress towards a more equitable and ecologically sound outcome, and the country can allocate capital better, then I think the market today is very cheap," Lai says. But he warns: "If the reform stalls, then we would have to reassess the market and our investment".


http://www.smh.com.au/business/markets/why-shanghai-and-hong-kong-are-the-worlds-cheapest-sharemarket-bubbles-20150423-1mr279.html

Friday 1 March 2013

Singapore to raise property tax rates for luxury homeowners



WRITTEN BY BLOOMBERG   
TUESDAY, 26 FEBRUARY 2013 17:54

Singapore plans to raise taxes for luxury homeowners and investment properties, widening a four- year campaign to curb speculation after prices in Asia’s second- most expensive housing market rose to a record.

The higher tax will apply to the top 1% of homeowners who live in their own residences, or 12,000 properties, Singapore Finance Minister Tharman Shanmugaratnam said in his budget speech yesterday, without giving a definition of what constitutes a high-end home. The government will also raise tax rates for vacant investment properties or those that are rented out, he said.
Singapore joins Hong Kong in extending anti-speculation measures as low interest rates and capital inflows drive up demand and make housing unaffordable. Residential prices in Singapore climbed to a record in the fourth quarter as an increase in the number of millionaires drove up demand.

“The graduated property tax on luxury properties may impact investors, particularly corporates and high-net-worth investors,” Petra Blazkova, head of CBRE Research for Singapore and Southeast Asia said in a statement. “It may put pressure on the holding cost of investment properties held by developers and investors.”

The property index tracking 39 developers fell 1.2% to a one-month low at the close in Singapore. CapitaLand, Singapore’s biggest developer by assets, declined 1.5% to $3.86. City Developments, the second largest, slid 1.8% to $11.15.

HONG KONG
Singapore’s latest efforts were announced three days after Hong Kong increased property taxes. The Hong Kong government last week doubled sales taxes on property costing more than HK$2 million ($319,900) and targeted commercial real estate for the first time as bubble risks spread in the world’s most expensive place to buy an apartment.

“The property tax is a wealth tax and is applied irrespective of whether lived in, vacant or rented out,” Shanmugaratnam said. “Those who live in the most expensive homes should pay more property tax than others.”

For a condominium occupied by the owner in Singapore’s central region with an assessed annual rental value of $70,000, the tax will rise 5% to $2,780, according to the budget statement. If that home is rented out, the tax will climb 21% to $8,500, according to an example highlighted in the statement.

Based on a 3% rental yield, that property is worth $2.3 million. Gains in levies for properties assessed at higher rental values will also increase at a faster pace, it said. For a house with an assessed rental value of S$150,000, worth $5 million based on the same yield assumption, the tax will rise 60% to $24,000. The revised taxes will take full effect from January 2015, according to the statement.

Singapore is Asia’s most-expensive housing market after Hong Kong, according to a Knight Frank LLP and Citi Private Bank report released last year that compared 63 locations globally.

http://www.theedgesingapore.com/the-daily-edge/business/42916-singapore-to-raise-property-tax-rates-for-luxury-homeowners-updated.html

Tuesday 24 August 2010

Property advice from Hong Kong tycoon, Li Ka-Shing


LIVE IN Magazine | Jul 19, 2010
Property advice from Hong Kong tycoon, Li Ka-Shing

Hong Kong tycoon, Li Ka-Shing

Home prices have risen rapidly in the last 15 months, sparking concerns about a possible bubble in the Hong Kong market. While urging caution, Li Ka-Shing avoided the “B” word while answering questions at the recent results press conference for his two flagship companies, Hutchison Whampoa Ltd. and Cheung Kong (Holdings) Ltd. Instead, he praised government officials for their effective use of mortgage-tightening measures and tough talk to keep the market in line.

“I think the Hong Kong government has already tried its very best to keep prices stable," Li told a throng of reporters. “I think the government has done a nice job.”

The annual results conference usually affords the biggest opportunity for local journalists to dig for sound-bites from Li, who is known to many in Hong Kong simply as “chiu yan,” or ”superman,” for his investing prowess.

Referring to past statements in which he’s recommended citizens buy property if they have extra cash on hand, Li grinned and said, “If people bought when I suggested, they would have done very well.”

In Mainland China, where Beijing officials are focusing on land hoarding by real estate developers, Li said his companies hadn’t ever been challenged by authorities.

Not everyone in the Li clan has been as fortunate. Earlier this month, Beijing municipal authorities banned Pacific Century, a company controlled by Li’s younger son Richard, from making future land acquisitions in the city after the company allegedly failed to proceed with work on a real estate project in the city in a timely manner. A spokesman at the time said company officials were seeking more information about the incident and declined further comment.

The elder Li cautioned observers against reading too deeply into that matter. “You can’t just look at what’s on the surface, or you’ll misunderstand. It may not be a matter related to Pacific Century at all,” Li said, without elaborating.

Mostly, the tycoon left the property market commentary to elder son Victor, seated to his right, who summed it up this way: “In the end, property is a question of supply and demand – and in Hong Kong, supply is limited and demand is growing,” Victor Li said.

http://www.starproperty.my/PropertyGuide/Finance/5944/0/0