It’s not often a good sign when the head of a company comes right out and tells you that price growth on his main product is entering bubble territory.
That is precisely what Wang Shi, chairman of developer China Vanke (000002) did, when he said in an interview with the Wall Street Journal last week that certain major cities "clearly" suffered from bubbles that could "infect second-tier cities, which would be similar to the nature of the Japanese bubble decade."
Vanke’s shares were curiously unperturbed by the news, investors perhaps placated by government stimulus bromides. With no immediate fears of an easy money supply being cut off, there will still be plenty of cash to sink into property and equities. The huge rise in housing starts in November – up 194% year-on-year – does raise some questions about how long and how quickly prices will keep rising.
While ending the day on Monday with a sharp rise, Vanke’s shares ended the week down by 2.56%.
China COSCO Holdings (601919) also ended the week down a bit more than 2%. CEO Wei Jiafu was in the news again after his dreams experienced a rude awakening at the hands of the global slowdown. From mulling a future of nuclear-powered container ships, he is now expecting that container firms will delay or cancel 40% of new ship orders. Disappointing news for those looking for "nuclear wessels."
The Capitalist Roader Fund is down 25.51% from June 3, 2008. The Shanghai Composite Index is down 5.5%.
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