Chinese property demand will withstand curbs

Shanghai:  Demand for housing in China will withstand government bank lending curbs, and further declines in the nation's property stocks may be an opportunity to buy the shares, Templeton Asset Management's Mark Mobius said.

"We don't see fundamentals of the property industry will change much because of these new policies," Mobius, executive chairman at Templeton, said in response to questions sent by e- mail.

"We are in general still light on Chinese developers and if this correction brings valuations to more attractive levels, it would be a good opportunity for us to step up our positions," he said.

A measure of 34 property stocks on the Shanghai Composite Index has plunged 7.3 per cent this week after the government limited loans for third-home purchases, increased down payment requirements and raised mortgage rates.

China's cabinet has said stricter measures to control speculation are needed after property prices in 70 cities jumped a record 11.7 per cent in March.

Martin Currie fund manager Chris Ruffle said in an interview last week that Chinese real estate stocks are becoming "more attractive" as government measures drove valuations to a year-low and made interest rate increases less likely.

Growth could be peaking

China's "excessive" credit expansion and surging real estate prices are "danger signals" that growth is peaking, investor Marc Faber said. "There are some symptoms of a bubble building in China, with the increase in foreign exchange reserves, rapidly rising property prices," Faber, the publisher of the Gloom, Boom & Doom report, said in a television interview Tuesday. "From here on, the China economy will slow down regardless. Whether it will crash this year or later, I don't know.

"If you believe the government can steer the economy like a car, that's not my view," said Faber, who oversees $300 million (Dh1.10 billion) at Hong Kong-based Marc Faber. Government measures "always lead to unintended consequences", he said.

— Bloomberg