2014-03-20

Third and Fourth Tier Cities See Explosion in Risk; Some People Will Lose Life Savings

So reads the top headline in the real estate section on iFeng.三四线房地产泡沫风险大规模爆发 部分人或血本无归

This is an opinion piece (Google Translated):
Xing Yun home event fermentation room appears as the real estate bubble to pay partial consideration era has opened.

Lack of financial strength, riding the wrong period of real estate developers pay first. While in Fenghua Xing Yun local home belonging to big developers, but not on the number of rows in the country, the limited financing capacity in the usury market Nizushenxian it, as long as the real estate market there are signs of trouble in asset prices fell, developers will pull in the mire no legs.

"21st Century Economic Report" revealed that government debt buyers to participate in the event Xing Yun disposition analysis, the original real estate situation, the high value of the land, the banks would like to see mortgage lending limit is also large, but now the price of land fell, "such as changting project, the original assessment of land 1 million yuan / mu, now with lots of land, only the value of 3.28 million yuan / mu. "Xing Yun buyers, banks are made ​​in accordance with 10 million yuan per mu, market planning, and now Asset prices fell by half, based on asset prices of all financial , industrial planning fall, bad debts bottom.

The local government, after relying on real estate and automobile industry boost consumption, driven by dozens of industry is right now to maintain a prudent monetary policy, or even stop lending first mortgage is correct, when the transaction price to grasp this important land the right side does not assume any risk, the risk is all borne by the other party, the only way is to ensure a healthy cash flow, you can always come to resist regulation.

Precisely in this respect, the growth of real estate developers accustomed too lightly. From the long-cycle, from China after residential market, so far the rise cycle, each time the developers confidence dropped to the bottom, the consequent capital growth will allow developers to regret not having a large purchase of assets, not a lot borrow money to develop, forming a conditioned reflex that lack the ability to predict the risk of entering the real estate industry are as river carp, A-share market more than Liu Cheng enterprises involved in real estate. A small storm, the boat is not solid enough to overturn the seabed.

Today, monetary tightening, unless listed in the international market financing channels, how to become a public company and investor protection laws, otherwise, be insufficient cash flow developers usury lending, become sacrificial victims who bear the brunt. The reason for the interest of local government from rescue to do-run home prepare for his funeral, is change the environment of the doldrums, complex local debt market, so rescue becomes unrealistic. Xing Yun home destruction, suggesting Zhejiang entrepreneurs in any industry are at risk, real estate is no exception, is engaged in their own good preservation of the industry. Zhejiang's Wenzhou real estate bubble from radical to enter the real estate market in the country somewhat mild Fenghua, we can see the trend of expanding foam covering.

Second, pay a financial chain into high-interest investments, whether or Erdos Fenghua, Ningbo, civil monetary tightening led to high interest financial everywhere, everyone in the cat's paw, waiting to earn the balance sheet because of the collapse of dying enterprise Finally, the main pot of gold, it is immoral, but do not rely on market start-up period of moral victory.

Xing Sheen's creditors are mainly banks, WASHINGTON official verification data to show that the bank Qiandai involved are 19, including the Agricultural Bank of China, CITIC [ Introduction News ], Prudential, Zhejiang, China Minsheng Bank, etc., I believe 24 Banks will have to write off part of the loan billion, but most recovered through asset auction. The problem is that individual claims, the company helm Shen's son has in November 23, 2013 and January 24, 2014 on suspicion of the crime of illegal deposits from the public by the public security organs in criminal detention. There is evidence of illegal deposits from the public more than 700 million yuan, involving 98 people (including organs and personnel 7).

Banks and individuals have the same rights as a creditor, but the individual's high interest is not protected, not only that, the task force and emergency leading group currently Fenghua established career for someone's office staff, City Commission for Discipline Inspection has also been involved in the investigation, authorities career Unit staff will be held accountable because the discipline. From banks to individuals, because the company insolvent liquidation will be damaged, according to the insolvency order, the principal is able to get back down. Ultra-day event from debt to certain elements of the loss of trust, this debt deal Hing home run, all investors should be aware that the market is entering a high interest rate means high risk, the central bank and the local government is no longer reveal all the details, a sure win not lose the era has ended. And businesses, for investors, the first prerequisite is safety, the second is the income.

The real risk Xing Sheen incident that triggered the third and fourth tier cities real estate dominant, large-scale outbreak of the risks implicit trust, whether because of the risk of the spread caused by the collapse of banks' balance sheets, rather than local banks to write off $ 1 billion. Or usurer lose everything, this is not the scope of policy makers to consider. As long as it is not a big risk of spreading the risk, from this perspective, the central bank through the Ordos, Wenzhou, Fenghua were actual pressure test, which is much more reliable than the paper test.

Volatile market, do not expect a savior, only you control the risk, a thorough understanding of project risk, credit, earnings prospects, in order to save himself.

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