Citi: If You Thought China Was In A Bubble, You Haven’t Seen Anything Yet
Courtesy of Gus Lubin at Clusterstock/Business Insider
Citi’s Willem Buiter is calling the Chinese crash… in 2013.
The scary reason why it will take another three years for China to trainwreck is that the real bubble hasn’t even started yet.
After ten years of spectacular growth, China is still within the bounds of its remarkable fundamentals says Mr Buiter.
The world’s largest consumer class, blossoming in an orderly system, should be kicking the world’s ass. But over the next two years, Buiter warns, expect asset price movements to decouple entirely from fundamentals.
Then — unless Beijing outperforms every boom state in history — the bubble will…
Although we still seem to be in the early stages of an asset boom, bubble and bust sequence in the property and land markets, and perhaps just in the recovery stage for the stock market, it is nevertheless likely in our view that China will experience such a sequence, starting in the residential real estate market. From there it is likely to spread to the commercial real estate sector and to the stock market also. Predicting the timing of the bubble phase (when asset price movements decouple completely from fundamentals) and of the bursting of the bubble (when the fundamentals exact their revenge) is not a science – probably not even an art, but more something akin to witchcraft. Our best guess is that a significant bubble may still be one or two years away, and the bust probably at least three years.
Don’t miss Why Shanghai Real Estate Is The Most Obvious Bubble Ever >
See Also:
GMO’s Edward Chancellor: Watch Out For China’s 10 Big Red Flags
Here’s Why Andy Xie’s Latest Claim About Chinese Real Estate Is A Bombshell
