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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (24717)3/2/2005 8:01:46 PM
From: RealMuLan  Read Replies (1) of 116555
 
I agree with him that the extremely high commodity price is not sustainable, but it is hard to say about the asset price, especially in those couple of big cities like Shanghai or Beijing.

The matter of the fact is a lot of Chinese (maybe even some non-Chinese) all over the world would like to own a decent apartment in those couple of big Chinese cities, plus a lot of wealthy Chinese from other Chinese cities, so the demand is definitely there. Plus the land is controlled by the gov., and it is in very short supply. High demand + low supply, this should be a perfect equation for high asset price. There might be a couple of pocket housing bubbles somewhere in some cities, but in a long run, I mean a couple of decades down the road, the asset price in big cities in China will only go up.

I know Andy Xie has been singing the blue of housing price in Shanghai will collapse for the last 4 some years. But the fact is that he has been wrong up to now. And my guess is that he will be wrong until 2009 (the world Expo).

>>In summary, the global financial markets are speculating in China-related assets, in the belief that Chinese prices will rise to OECD levels. I believe that OECD prices are more likely to fall towards Chinese levels.<<

I think neither is right<g>. OECD price and China’s price will find a middle ground somewhere in the next couple of decades<g>
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