Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Redefining Political Economy, Globalization & Business Models Consequent on Corona Virus Pandemics - 9th Apr 20
Plus500 Rreview - 9th Apr 20
Gold Price Closely Tracks Debt-to-GDP Ratio - 9th Apr 20
Gold, Silver and Rigged Market Socialism - 9th Apr 20
Going to School in Lockdown Britain, Dobcroft Sheffield - 9th Apr 20
Amazon Face Masks to Protect Against Covid-19 Viral Particles N95, FPP2, PM2.5, for Kids and Adults - 9th Apr 20
Is Natural Gas Price Ready For An April Rally? - 8th Apr 20
Market Predictions And The Business Implications - 8th Apr 20
When Will UK Coronavirus Crisis Imrpove - Infections and Deaths Trend Trajectory Analysis - 8th Apr 20
BBC Newsnight Focuses on Tory Leadership Whilst Boris Johnson Fights for his Life! - 8th Apr 20
The Big Short Guides us to What is Next for the Stock Market - 8th Apr 20
USD Index Sheds Light on the Upcoming Gold Move - 8th Apr 20
The Post CoronaVirus New Normal - 8th Apr 20
US Coronavirus Trend Trajectory Forecast Current State - 7th Apr 20
Boris Johnson Fighting for his Life In Intensive Care - UK Coronavirus Crisis - 7th Apr 20
Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up! - 7th Apr 20
Crude Oil's 2020 Crash: See What Helped (Some) Traders Pivot Just in Time - 7th Apr 20
Was the Fed Just Nationalized? - 7th Apr 20
Gold & Silver Mines Closed as Physical Silver Becomes “Most Undervalued Asset” - 7th Apr 20
US Coronavirus Blacktop Politics - 7th Apr 20
Coronavirus is America's "Pearl Harbour" Moment, There Will be a Reckoning With China - 6th Apr 20
Coronavirus Crisis Exposes Consequences of Fed Policy: Americans Have No Savings - 6th Apr 20
The Stock Market Is Not a Magic Money Machine - 6th Apr 20
Gold Stocks Crash, V-Bounce! - 6th Apr 20
How Can Writing Business Essay Help You In Business Analytics Skills - 6th Apr 20
PAYPAL WARNING - Your Stimulus Funds Are at Risk of Being Frozen for 6 Months! - 5th Apr 20
Stocks Hanging By the Fingernails? - 5th Apr 20
US Federal Budget Deficits: To $30 Trillion and Beyond - 5th Apr 20
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition - 5th Apr 20
Visa Denials: How to avoid it and what to do if your Visa is denied? - 5th Apr 20 - Uday Tank
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

China/Asia Economic Implosion on the Horizon? - Part V

Economics / China Economy Apr 04, 2018 - 12:35 PM GMT

By: Chris_Vermeulen

Economics

As we, the research team at www.TheTechnicalTraders.com, continue to deliver sections of this multiple part global market research report centered around China and Asia as a catalyst for an impending global market/debt collapse, we want to make sure our readers understand this process will likely play out over many months into the future.  This is not something that we should concern ourselves with right away.  This is not a warning that “the sky is falling and we need to run to our bunkers”.  This is forward-looking research that indicates a strong possibility that China and Asia, along with many other nations in this region, may experience a credit/debt market contraction that could lead to another global credit crisis and we need to be aware of it and plan to profit from it. (Part I, Part II, Part III, Part IV)


So far, we have covered the history of Chinese property and equity market growth from before the 2008-2010 global credit crisis till now and have clearly shown that the Chinese property market is rolling over (downward) after the 2016 regulations were put into place to curtail the mass exodus of capital from within China.  We have also gone over many of the correlative economic items that point to the fact that a 15~25% correction in any one market segment, property, equity, credit/debt or global markets that result in capital risks for China, could drive a contagion effect for the Chinese investors/government.  In other words, a simple 10~20% price decline in two or more of these markets could put enough pressure on the Chinese that capital reserves could diminish dramatically as well as some level of investor panic could set in to drive a “death spiral” type of event.

Even today, our researchers visited the National Bureau of Statistics in China to continue our research and found the following :

Whereas growth rate of purchases (land), commercial sales and floor space sales and growth rate of fund for development have decreased dramatically just over the past 3+ months.  When you look at this data on a year over year context, it shows mild contraction up until December 2017.  After December 2017, the contraction in Residential and Commercial real estate activity is dramatic – almost frightening.

Throughout all of 2017, the Growth Rate of Investment in Real Estate Development averaged near 8.1%.  Beginning in early 2018, this level shot up to 9.9% – the highest level in over 13 months.

Growth of Land Area Purchased over the same period showed signs of increase over 2017 – averaging near 11.2% or so throughout 2017.  The values of this indicator near the end of 2017 were above 15%..  Whereas the 2018 levels show a -1.2% growth rate.  In one month span, the level of this indicator fell -17%?

The Growth Rate of Floor Space and Sales of Commercial Buildings continued to decline throughout most of 2017.  Starting near 25~26% and ending the year near 10% – a -15% decrease.  What we found very interesting is that Sales of Commercial Buildings increased 1.6% in early 2018 while Floor Space sold decreased 3.6%.  It would appear the Chinese central bank is willing to lend to property buyers while floor space buyers are falling off the map.

Our primary concern with regards to any type of Chinese or Asian credit market collapse is that the recent 5 to 7+ years of outward capital expansion, expanding investments outside of China/Asia in support of lofty objectives and fuzzy real/return values, may have prompted a massive sub-standard debt issue that could become very dangerous for the world.  We’ve all been reading of the issues of Non-performing assets and loans in China recently.  These types of credit/debt are the same types of instruments that led to the 2008~2010 global credit crisis.

Imagine the Chinese economy as both a local organism (contained to only the China/Asia general region), but also as an international organism (depending on external sources for essential life sustaining components – like the US and UK for purchases and the other emerging markets for growth projects).  Now, imagine these external sources experience an extended 10~35% general asset decrease over a period of 3~5+ years while the US Federal Reserve, and other central banks, tighten the credit markets and push up borrowing costs.  If China is dependent on these outside sources for essential economic sustaining components, then the economic balance they depend upon could become threatened – if not even more fragile than we have already examined.

Yet, consider one additional component of this hypothetical exercise.  Consider that the Chinese property and equity markets experience a moderate contraction event (say 10~20+% lower over 2~3 years) while the US and other established economies continue to push up the borrowing costs with rising interest rates.  We have long believed that capital migrates into the most healthy and opportunistic environments, with ease, and as capital migrates to new sources of returns, it leaves deteriorating economies in a “death spiral” for a period of time.  Capital that is unable to quickly move to new opportunistic sources may become trapped in these contracting economies for many years or decades.

The signs of this hypothetical economic exercise are already starting to become evident.  Recent China housing market data shows an incredible decline in activity and pricing – about to fall into negative territory.

China’s property market cycles have topped out as well, indicating a strong potential for further contraction in the real value of property assets.

Combine this with a global central bank tightening and recently announced US/China tariffs and economic positioning and we have the making of another Global Crisis event – this time originating in China/Asia as the Chinese Dragon economy bursts.

As US mortgage rates continue to climb above 5%, the inevitable economic tightening across the US and globe will continue.  The attempt to move China away from a US Dollar based economy and become more focused on the Chinese Yuan will, in our opinion, be a difficult transition over many decades.  We believe the Chinese/Asian markets are on the cusp of a potentially dramatic collapse and the recent news of US and Chinese tariffs do nothing more than exasperate the current issues.  Pay very close attention to the surrounding Asian markets as we continue to watch for breakdown events.

In the next, and last, portion of this series, we will attempt to present our final conclusions and expectations for traders and investors.  We have attempted to clearly illustrate our detailed China/Asia market research and the potential for a dramatic price decline in the immediate future.  We’ve outlined how this incredible opportunity for investors was setup, almost perfectly, by the global recovery efforts after the 2008-09 credit crisis.  At this point, it would appear the Chinese Dragon economy is on its last leg and we are well positioned to take advantage of the next big move.

If you find our research valuable and want to learn how you can stay on top of these moves while profiting from them, visit www.TheTechnicalTraders.com to learn more about our services and memberships.  We work very hard to keep our members aware of these types of opportunities and make every effort to deliver successful results for our valued members.  We hope to see you in the members area soon where we can share more insightful analysis and research.

With 53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen
Technical Traders Ltd.

Chris Vermeulen
www.TheTechnicalTraders.com

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several leading financial hubs like MarketOracle.co.uk

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

Chris Vermeulen Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules