According to Bloomberg, Goldman Sachs asked theirclients to exit any bullish bets on Hong Kong-listed companies inChina.
“We are closing our recommended long position in Chineseequities”, Goldman analystsincluding Noah Weisberger wrote in an e-mailed report datedyesterday. “We think the balance of risks is no longer attractive.”
The chinese government crackdown on property speculation isdamping home sales and construction just as Europe’s soveriegn-debt crisis threatens exports. According to UBS, GDP will increase 8 percent in 2012,less than a previous call of 8.3 percent. Citigroup cutits forecast to 8.4 percent from 8.7 percent. Morgan Stanley yesterday lowered its China growth estimatefor next year to 8.4 percent from 8.7 percent.
China’s economy grew 9.1 percent in the third quarter froma year earlier. Expansion has slowed from 11.9 percent in thefirst quarter of last year.
Poly Real Estate Group, China’s second-largestdeveloper by market value, said its contracted sales fell 39percent in October from a year earlier. Barclays Capital estimates home prices may decrease by 10 percent to 30 percentin the next year. Home prices fell in 33 of 70 cities inOctober, government data shows.
“We think a sharper deceleration in property investment isthe biggest risk to China’s economy,” Johanna Chua, Hong Kong-based chief economist for Asia at Citigroup, said in today’sreport. “But a hard landing can be averted in the near termwith sufficient policy flexibility to provide offsetting supportfor growth, especially on the fiscal front.”
The OECD has lowered its estimate forChina’s 2012 expansion to 8.5 percent from a 9.2 percentforecast in May. A slowdown in property sales could triggerdeveloper collapses and lead to bad loans, it said.