Will Shanghai? Won’t Shanghai?
Introduce a real estate tax that is.
The Shanghai stock market rallied yesterday, May 24, on speculation—and that’s all any of this is—that the city government would put off any real estate tax for three years. Any tax on property introduced in Shanghai would be China’s first.
Today it’s back to worry that the tax is due sooner rather than later.
That fear had led to a rout in the stocks of China’s real estate developers that is a major reason for a bear market in Shanghai stocks that has sent the market down 25% from its November 2009 high.
In today’s story the Economic Observer says the city will start a property tax trial run in June. The oft-repeated prediction is that a property tax would lead to a 30% decline in housing prices in Shanghai.
No one knows what kinds of property would be subject to the tax. On May 14 the 21st Century Business Herald reported that the tax could extend to residences as well as commercial properties.
Jim,
PLEASE don’t worry about dealing with anal proof readers. I (along with 99% of other readers I guess) follow you for investment advice, not purfect gramer and speling.
“Forget war in Korea–it’s a possibile real estate tax”
Seriously, get someone to proof read your columns. I haven’t seen a single one without 4-5 horrible mistakes.
yx,
One day does not a bull market make. 😉
The problem for bulls is: Where’s the beef? You need something good to build on. Past earnings are no guaranty of future results, and there’s a lot of dark clouds on the horizon.
As Jim correctly pointed out, there is much worry out there. All it takes is one piece of bad news to turn worry into fear. And as we all know from Master Yoda, “Fear leads to the Dark Side.” In this case, the Dark Side would be a bear market, and possibly even a market crash.
Come over to the Dark Side, young jedi. 😉
Jim, off topic, I notice that BRF-Brasil Foods , on your watch list, has gone down by 75%; any comment?
Ed:
I always wonder why the redistributionists don’t go out to start their own businesses if they think the fat cats can so easily make so much money?
The market finished today in GREEN! Must be a lot bargain hunters out there.
Ed:
I think we entered into a long term bear since the bust of dotcom. However, there will be many short term bulls within.
yx,
Nah. The bears are just taking a breather. 😉
ED:
I just wanted to see some stability before I buy anything. And I also want to see how Eurpe’s mess effects US companies. It may be too soon to tell.
But I do see the market may have hit some kind “floor” today, Fri., Mon. (I could not believe the market is only 3 point now.) I have to say the market was pretty resilient in the last 3 trading days.
Off Topic… for all you ORA owners, a WSJ mention on insider buying during the recent slide:
“Ormat Technologies (ORA). In the past two weeks, ORA’s parent company, Ormat Industries, based in Israel, has bought $4.2 million of stock. Could it be trying to fold ORA back into the parent by slowly accumulating stock until it announces a buyout? ORA is a leading provider of geothermal power, running plants for geothermal energy and providing the equipment for plants. In the independent energy space it competes with the likes of Calpine (CPN)”
http://blogs.wsj.com/financial-adviser/2010/05/25/insider-buying-amid-the-bloodshed/
yx,
Why so negative? There are plenty of undervalued market shorts out there to buy! 🙂
Real estate tax in China (not just Shanghai) is absolutely necessary. They should exempt the main resident though.
Off topic:
I have not watched today’s market yet! I know it’s down when I went through Bloomburg, reuter, etc. I decided not to be bothered by it. I decided nothing to buy at this moment and nothing to sell either. So,why bother?