Here’s one way to track the amount of loose credit floating around the Chinese market – Lamborghini sales.
I guess it is as good a way as any to measure how flush the cadre of property developers and coal barons are feeling.
So last year, in the first half of 2009, directly after the financial crisis, the China Lambo index stood at a mere 26 cars sold.
Bearing in mind that you need to place an advance order for one of their super-charged, super-sleek monsters, I’m guessing that those 26 were the ones ordered during the financial crisis itself, which explains the low tally.
Between January and July of last year, of course, a tidal wave of stimulus cash and new bank loans was poured into the system, inflating both the property and stock markets. Turns out it inflated our Lambo index too, because in the second half of 2009 another 46 cars arrived in China.
Turning to this year, it seems the tycoons were still riding that wave of cash because an astounding 86 cars (almost one in ten of the world’s Lamborghinis) were sold in the first half.
However, the government’s recent efforts to put the genie back in the bottle and bring property prices down seems to have left some millionaires feeling strapped for cash.
Stephan Winkelmann, the head of Lamborghini, says he expects to only edge to 100 cars sold in China by the end of the year, suggesting there are only orders for a further 14 cars in the whole of the second half.
Where does that leave us? Well, the plunge in the Lambo index is much sharper than the recent slowing of the economy would suggest it should be. In China’s Tier One cities (let’s face it, there’s no way a Lambo could get over the bumps in the roads of a Tier Two or Three city), we can expect a steep fall in property prices, and it may not be the best time to be opening projects like this one, or this one….