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Yesterday, Cheung Kong (1.HK) spent billions of dollars and bought two sites within hours.  Although Cheung Kong is not as bullish as Li Ka-shing is suggesting, it appears not as bearish as I thought.
What about others?
Lee Shau-kee, whose action of buying its own company’s shares has become a huge joke (he exercised the warrants of his company at the exercise price of HK$58 per share, and the share price now is below HK$50), seems to be sobering up a bit.  Yesterday, he told the press that the pace of influx of Chinese buyers is slowing.  The reason is that monetary and credit tightening has increased funding costs in China, affecting the desire of Chinese buyers to come shopping for flats in Hong Kong.  Interestingly enough, he seems to be the first developer to say so publicly (as far as I can remember), though he is hardly to first one who said so.
Of course, I have been very early in warning about the spill over of China’s monetary tightening to Hong Kong, and early this year I have already highlighted the potential risk of slowing down of the influx of Chinese buyers due to possible tightening in China.  Likewise, Andrew Lawrence of Barclays Capital (a.k.a. the skyscraper index guy) is currently raising the same warning flag.  Not many people believe that.  In fact, most people still don’t despite the fact that it is happening.
An even more interesting note is coming from Hang Lung Properties (101.HK), one of the best property market timers in town.  Certain rumblings suggested that it will be selling some its remaining inventories of the Long Beach.  Now Hang Lung Properties has more than 1,200 flats remaining in the Long Beach after leaving them empty for years, and they are probably planning to sell them.  Ronnie Chan, the chairman of the company, has now built up a reputation for getting the property cycle right.  If he is indeed selling, this is a signal that one should be reading into (while Li Ka-shing’s remark should be ignored).
Despite testing new highs, property prices can be described as “moving sideway” at best.  While I won’t be surprised that property prices continue to test new highs in the coming months, On a full-year basis, I am still maintaining my base case of 0-10% rise in home prices, with the lower bound of the range being more likely, implying a possible correction in the order of 10% or more by the end of the year.


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