3 Must Read Stories: China’s Party Reshuffle, Bitcoin Bubble, China House Prices Soar
China will convene a significant meeting of the Communist Party on October 18, an event that is expected to lead to a major shakeup of the leadership of the world's second largest economy.
The 19th Congress - held every five years - will be closely watched to see how President Xi Jinping's grip on power is translated into promotions for those closely aligned to him, plus investors will be focused on the 'work report' that outlines key priorities for the next five years. Bloomberg has taken a closer look at what the meeting means for investors:
“There are two big concerns among overseas investors who are interested in China -- the yuan and the uncertainties around the party congress,” said Han Tongli, chief investment officer at DeepBlue Global Investment Ltd. in Hong Kong, which oversees $200 million. “Once the dust has settled and the uncertainties have gone post-congress, investors will re-evaluate market pricing.”
China’s policy makers have stressed the need for stability and order in financial markets in the lead-up to what will be the 19th congress, even as they persist with a campaign against leverage endorsed by the country’s top leaders. Investors have taken comfort in the strengthened yuan and buoyant stocks, betting officials will act swiftly to quash any signs of speculation or upheaval that could distract from the party’s message of prosperity and control.
Bitcoin's spectacular gains this year have stocked concerns the digital currency may be in a bubble. CNBC has talked to Informa Financial Intelligence strategist David Ader who reckons the five-fold rise in the price of Bitcoin this year is a little over the top:
"This is the price chart for an overly frothy market, in my opinion. I just don't see anything quite as comparable to this in bubblelicious terms," said Ader, a former top-rated bond market strategist.
Bitcoin climbed more than 3.7 percent Thursday to a record of $4,802.74, up nearly five times in price this year and about 67 percent higher for August, according to CoinDesk.
"I think it's going to come to a sorry ending," Ader said. "I don't know anybody who's actually used a bitcoin for any purpose legal or otherwise. This looks like an overly frothy market and frothy markets lose their froth."
Ader said he used the Nasdaq telecom index since many of those stocks led the Nasdaq composite's overall gains during the tech bubble. The Nasdaq telecom index shot up more than 700 percent from 1995 to 2000, before collapsing 90 percent in the next two years. The index remains about 75 percent below its record high.
China's property market has been red-hot, with the pace of gains seeing Chinese cities dominate a list of the world's fastest growing housing markets. The South China Morning Posthas the details:
Twenty one of the world’s 50 fastest growing housing markets, based on price, are in China, according to a latest report, rekindling fears the domestic sector is overheating as money continues to pour into bricks and mortar.
Complied by research house Hurun Report, the study highlights growth in global home prices in the 12 months to June 30, with 42 of the 50 cities under the spotlight from 12 countries it examined, being hit with price rises of more that 10 per cent in the period.
The five cities to suffer the fastest growing prices were Toronto, Reykjavík, Wuxi, Hong Kong and Zhengzhou, the provincial capital of Henan Province.