[photopress:property_shanghai_1_2_3.jpg,full,alignright]Moody’s Investors Service said it has a ‘negative’ outlook on China’s property development sector as tighter credit conditions are likely to continue over the next 12 to 18 months.
Moody’s analyst Peter Choy said, ‘The overall sector has negative prospects in the near and medium term because developers face challenges in funding their capital expenditure with domestic and overseas funds, while also facing a more problematic sales environment’ .
However, Moody’s said it maintains a ‘stable’ rating outlook for eight of its 13 rated mainland developers, adding that some still have cash available from last year’s bond and equity issues.
Peter Choy added, ‘In addition, according to our scenario analysis, most rated developers can withstand tightened bank lending and a 25% fall in their projected sales for 2008. This situation, however, assumes they make no further acquisitions which eat into their existing balance sheet liquidity.
Which brings us to a fundamental point.
If all analysts are so good at forecasting the market how is that not one — as in not a single one — gave distant early warning of the American sub-prime crisis. Not analysis post facto; a clear and understandable warning well before the event. Surely that is what analysts are for?