What will happen to the world trade and economy if real estate bubble burst in China?
Wayne has landed in China recently and he thinks there will be serious down turn in hot real estate market in China. I agree with him and present real estate bubble is not limited to USA. Pl see following link for more details:
http://en.wikipedia.org/wiki/Real_estate_bubble
As a result of real estate bubble:
Demand for cement, iron, rubber, timber and other building materials will come down and industries in this sector will hit hard. So we must avoid these sectors now.
Financial companies, banks which are given more exposure to property sector will be hit hard. Really some banks and financial companies are struggling through out the world now.
Some property developers, property investors and financial companies will become bankrupt.
Some Dad and mum investors and general public will lose their savings.
What are your thoughts? Thank in advance.
Answers
3090 points
EthanR answered 5 months ago …
MNSL, it kind of looks as though you have answered your own question! I pretty much agree with what you have said.
Read more from EthanR flag as abuse great answer
2547 points
Oldman answered 5 months ago …
Because of govt-mandated infrastructural spending, I don't think a big drop in Chinese real estate values will have as much impact as they do here in the U.S. Yes, the consumer discretionary components of the HangSeng may decline, but the internal GDP represented by the govt's purchases and expenditures is about 2/3 of the total. And China, despite it's growth, is still a weeny capital market...it compares to about the size of three of the U.S.' largest states.
If you can go to SeekingAlpha.com, there's some recent comparisons of GDP/imports/exports/ and capital markets for the BRIC group, and how they have grown over the past 5 & 10 years.
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