Why the Fall of Syswin's IPO Underlines China's Realty Bubble

Thursday, Nov 25 2010 by
1
Why the Fall of Syswins IPO Underlines Chinas Realty Bubble

As the famous Bob Marley line suggests, 'you can fool some people sometimes, but you can't fool all the people all the time'. The same is indeed happening in the Chinese realty sector. There is no denying the fact that although China appears to be a dream investment destination today, the ongoing rush to invest directly in China can turn out to be a real nightmare in the long term, especially in the hyped Chinese Real estate markets. As the world fights a deep recession, which is getting murkier by the day, much of the world’s global capital has been flocking to China in recent years in anticipation that China's growth can act as a protective shield. Although this investment route has worked well in the past year, now it seems like a perfect case of putting the cart before the horse. As China's inflated equity and real estate growth, built largely on government-led economic stimulus measures and soaring asset prices - which lead to low interest rates and massive fiscal deficits run out of steam, it's quite evident that the Chinese bubble is already on its way to bust - bringing an abrupt end to the boom.

The False Start Of SYSWIN: Shares of real estate consultant SYSWIN (SYSW), which sells real estate services in 17 Chinese cities including Beijing, Tianjin, Qingdao and Jinan. opened flat with their initial public offering price, then fell as investors reversed course on a risky bet on China's red hot property sector.

The company managed to sell only 9.6 million American Depositary Shares for $7 each, raising about $67.2 million. The uncertainty in the Chinese realty sector as a whole also reflected this when SYSWIN changed the proposed size of its offering three times leading up to its IPO. The company first filed to raise up to $100 million, raised that amount to $123 million, then delayed its pricing by a day and cut the proposed value of its IPO by 41.5 percent.

Imminent Realty Price Correction: A recent Bloomberg report has quoted Beijing-based analysts at BNP Paribas as saying that China’s home prices will start declining from this month as the government maintains its lending curbs and increases the supply of public housing, forcing property developers to cut prices to boost sales. China’s property developers, the worst-performing group on the benchmark Shanghai Composite Index this year, will…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way

Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


Do you like this Post?
Yes
No
2 thumbs up
1 thumb down
Share this post with friends



Bullabulling Gold Limited (BAB) is an Australia-based mining exploration company. The Company’s Bullabulling Gold Project covers approximately 131 square kilometer (sq km) that is held in a series of granted mining leases, prospecting licenses and exploration licenses. The project is located in the gold mining district of Coolgardie in Western Australia. Its license area straddles the Great Eastern Highway, and lies near the south west of Kalgoorlie. The Company has identified two mineralized trends of primary orogenic gold mineralization, including the north-south striking Bullabulling Trend and the east-west to northwest-southeast striking Gibraltar Trend. The Bullabulling Trend contains the consistent gold mineralization and is traced for over 6 kilometers of strike. BAB is a wholly owned subsidiary of Norton Gold Fields Limited. more »

LSE Price
4.25p
Change
 
Mkt Cap (£m)
n/a
P/E (fwd)
n/a
Yield (fwd)
n/a




  Is Bullabulling Gold fundamentally strong or weak? Find out More »


What's your view on this article? Log In to Comment Now

You can track all @StockoChat comments via Twitter


About World market Pulse

World Market Pulse

World Market Pulse is a small team of specialized analysts and traders, focusing on multiple aspects and areas of interest. Our analytical base, in addition to fundamental and Technical factors, does include various other non-traditional and customized indicators, studies and authentic research in collaboration with field experts, real traders and experienced market watchers; that are normally ignored by the mainstream analysts. We specialize in top emerging markets, key commodities and major currency studies along with vital stocks, segments and sub-sectors more »



Stock Picking Tutorial Centre



Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis
Foliobuilder