He has rightly pointed out that after the Lehmanesque crash in late 2008, many of the Chinese real estate developers were essentially insolvent. In fact, he estimated that 85% of developers were insolvent. Unfortunately, the government bailed out the developers, and now the real estate market has gone through the roof. This is exactly why all those Chinese real estate developers are always so confident, telling analysts that “the government doesn’t want us to fail”.
He then pointed out that developers in China are now getting loans in Hong Kong for 13%, 15%, or even more (just as I have pointed out in 10 Reasons to short China), and that is very bad.
Sunday, June 26, 2011
85% of Chinese Developers Were Insolvent in 2008
Ronnie Chan On Moral Hazard In The China Real Estate Sector
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