Are pan-democrats ‘calling the top’ of Hong Kong property market?
- Many pan-dems have sold their homes, and a few have even fled the city to escape what they claim is rising tyranny. They may be right, at least inadvertently, about exiting a real estate market after a super-bull run that has made local properties the most expensive in the world
Sometimes, the best contrarian investment indicators are those that people neglect or use for other purposes.
What if a large number of well-known people suddenly decide to sell their homes at about the same time? Shouldn’t that say something about the local real estate market as some people are taking a bearish view of it, or even the city’s future as a whole?
But we are ignoring their “signal” because many of them are heavily involved in anti-government protests.
Psychologically, in light of the heavy crackdowns they face, they should also be the most pessimistic about the current state and future of Hong Kong. Could they be right?
It’s quite extraordinary the number of well-known pan-democrats and anti-government activists who have sold their homes in recent months. Among them are former lawmakers Lam Cheuk-ting, Alan Leong Kah-kit and Lee Cheuk-yan as well as actor and internet influencer Chapman To Man-chat and the parents of jailed protest leader Joshua Wong Chi-fung.
Lee reportedly offered a big discount to make the fire sale. Others have lowered asking prices.
I have no idea about their motives and reasoning. People make financial decisions for all sorts of reasons. Many “blue ribbon” commentators claim they want to run away as many are facing charges. That may or may not be so, but we will never know.
Lam, for example, says he has no intention to leave Hong Kong. But he needs the cash to pay for his child’s education as well as legal fees fighting multiple charges, now that he no longer has a legislator’s salary following the mass resignations of the pan-dem camp from the current legislature. Fair enough!
Those sellers are the ones who have confirmed to reporters about their property sales, so presumably there are others. The British government predicts a mass exodus under the new BN(O) scheme. It’s likely a propagandistic projection designed to ire Beijing, but it’s certainly not conducive to local market sentiments.
Still, the pan-dems may be selling at a very good time. If so, there is at least a silver lining to the heavy political and legal crackdowns they are facing.
Andy Xie, an independent economist and fellow Post columnist, wrote:
“Tesla rose nearly tenfold, bitcoin fivefold, and the Nasdaq nearly doubled. The asset inflation spread from the US stock market into other areas. Stocks and properties rose across the world. Property prices hit new records in lockdown ghost towns.
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“Two bubbles – America’s stock market and China’s property market – dominate the global economy. The Covid-19 bubble … may burst as quickly as it was formed.”
Let’s remember the super-bull run of the Hong Kong real estate market has lasted much longer, at least since the middle of the noughties.
But what got me all excited and scared was after reading a widely circulated newsletter from Jeremy Grantham, the legendary investor, freely available on gmo.com. The guy survived and prospered from the crashes in 2008, 2000 and 1989 in Japan.
Mostly likely he will make serious money from the coming crash as well, whenever it may be.
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“Since the summer the market has advanced at an accelerating rate and with increasing speculative excesses,” he wrote. “It is precisely what you should expect from a late-stage bubble: an accelerating, nearly vertical stage of unknowable length – but typically short.
“Make no mistake – for the majority of investors today, this could very well be the most important event of your investing lives. Speaking as an old student and historian of markets, it is intellectually exciting and terrifying at the same time. It is a privilege to ride through a market like this one more time.”
Privilege? What a strange word to use! Retail punters like me are just in it for the money, or rather the loss of it, as is usually the case, but hope springs eternal. Great investors, though, are not in the game just for profits; they see it as a psychological, moral and intellectual challenge.
As for the pan-dems, there is this old joke, in case you haven’t heard it before. A kid wasn’t paying attention in an English class, so the teacher put him on the spot and asked him to name three pronouns as examples. The kid replied: “What, who, me?”
So, while I almost always disagree with the pan-dems, this time round, I am not so sure they are wrong, for whatever reason.
