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Why China’s Real Estate Crisis Is Different
Sep 29, 2023
The podcast discusses the distinctions of China's real estate crisis, with over-leveraged developers but not households. It also explores contrasting consumer spending behaviors after the pandemic and the challenges and opportunities of investing in the Chinese market. The rationale for excluding China from emerging markets is discussed, as well as the impact of upcoming elections on investment strategies. The podcast ends with gratitude, a hiatus announcement, and a promotion for Bloomberg Technology Summit.
36:52
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Quick takeaways
- The current housing crisis in China is different because it is primarily affecting highly indebted property developers, not households who are not leveraged when it comes to real estate.
- Despite the challenges facing emerging markets, there are still long-term opportunities, particularly in friend-shoring countries like Mexico, India, and Vietnam, as well as in export-oriented and high-value added economies like India and Vietnam.
Deep dives
Chinese property stocks face concerns and low trading levels
Chinese property stocks are currently trading at their lowest level since 2011, leading to concerns about more defaults among developers. The housing market in China has experienced an overbuilding of apartments that are often owned but not lived in or rented, making it unproductive. Developers have become heavily leveraged, buying excessive amounts of debt and hoarding land and apartments without selling them quickly enough to pay it down. While there have been efforts by the government to shore up the housing market, the current state of the real estate sector remains a concern.
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