Now that the Chinese government has made it clear it aims to cool off the country’s property bubble, and property prices in some places are already being slammed, some Chinese investors may be encouraged to try punting stocks again.
Because to some it sure beats holding cash thanks to rising inflation expectations in the economy.
Pan shelved plans to buy an apartment after real estate prices jumped the most on record and the government banned loans for third homes to cool the economy. Interest on the 400,000 yuan ($59,000) she has in her bank account is being eaten away by rising inflation, and the country’s regulations limit her investment choices to property or domestic equities.
“The stock market is the best choice for the moment,” said Pan, a 27-year-old Shanghai accountant. “Even the bank staff advised me against depositing more money.”
“It becomes a question of who’s the least ugly girl at the fair,” said Victoria Mio, a Hong Kong-based senior fund manager at Robeco, whose firm oversees $194 billion worldwide. “There is some migration occurring and the shift will accelerate with a few months of negative interest rates.”