I am of the belief that Chanos, like Bass before, is wrong on every point they make about China, about the true natures, rationales, and main consequence as matter, as opposed to what they are applying from their very limited learnings from within the US economy, and so I have never bothered to do point by point refutation because it is too difficult without even an obviously ‘best’ starting point.
There is little point in debating a chemical engineer on the merits of architecture, if one was the architect.
I read Chanos and Kyle to get a sense of what folks mistaken are thinking, and not because I wish to debate the merits of their cases. Their cases have no merit, none, zero, zilch, bupkis, but let time settle it.
The apartments are filling up.
The 30M are what I would term inventory-in-process of a very large and urbanizing economy of continental scale, in line with 800-years pentup demand and 300 years rejuvenation break. China is big. If 30M apartments truly get wasted, so what? It is not as if such are financed in the majority on 0% down payment used to support a derivatives superstructure.
People, for example and for eons have said HK real estate is a bubble.
My issue with that is if the bubble is supported by only 30% mortgage LTV, in an arena of continuing take-up of residence, what exactly is the problem as long as actual rent vs real mortgage are on even basis, +/-.
We are now at ~US$ 5K per sft for mass-market residential, and likely as healthy as bitcoins at the mo. One cannot get mortgage beyond 50% LTV in HK. What? Folks are going to hand in the keys and walk away as they did per Bass / Chanos experience? Unlikely until the bitter end. |
