Wuhan, Chongqing and Chengdu aren’t exactly names that roll off the tongue for foreign investors in China’s real estate, but these cities may offer more bang for the buck than their more-famous coastal cousins or capital Beijing.
Helped partly by the government’s “Go West” policy and their less export-focused economies, Chinese cities in the country’s interior have posted higher per-capita-income growth than Shanghai, Beijing, Guangzhou and Shenzhen in the past year.
Along the coast, the port city of Tianjin is fast becoming the business center for northern China as authorities move to revitalize what was once the country’s industrial heartland. Dalian and Shenyang are other northern cities growing rapidly.
Michael Klibaner, head of research at Jones Lang LaSalle in Shanghai, said burgeoning growth in these second-tier cities would push up local demand for real estate and raise the capital value of commercial and residential properties.
“From a property perspective, these cities derive more demand from domestic companies than many Tier-I and coastal cities,” Klibaner said.
Nicole Wong, head of Hong Kong and China property research at CLSA, said the best way to tap the faster growth in Tier-2 and 3 cities would be to buy shares of major Chinese developers which have expanded there, such as China Vanke and China Overseas Land.
“Rather than buy physical property, it’s much better to have exposure to the experienced developers. You’ll have the best players mirroring the difference in growth rates by changing their geographical exposure to have a heavier presence in second-tier cities,” she said.
China’s 600-plus cities are divided into six different categories with a top tier comprising the most developed metropolises of Beijing, Shanghai, Guangzhou and Shenzhen cash advance lenders.
A second tier of around 15 large cities, comprises the independent municipalities of Tianjin and Chongqing and many of the provincial capitals.
Tier-1 cities now account for about 32 percent of Vanke’s projects in terms of gross floor area, down from 40 percent in 2002. For China Overseas, the ratio has dropped to about 33 percent from 71 percent.
Jones Lang LaSalle estimated Tier-1 cities accounted for about 27 percent of commercial real estate activity in China in 2007, down from 37 percent a decade earlier. The percentage could fall to below 10 percent by 2010 as smaller cities develop.
“The construction sectors in first-tier cities have become somewhat mature, with housing starts in Beijing and Shanghai consistently falling since 2004,” Australian securities firm, Macquarie Securities, said in a recent report.
China has been busy building roads, rail and other infrastructure in its interior and north since 2000 to narrow the income gap between cities along its southeastern seaboard and the rest of the country.
That process has quickened in recent months after the launch of China’s near $600 billion economic stimulus package last year.
Chinese cities such as Tianjin, Chongqing and Wuhan last year reported economic growth in the mid-teens compared with the 9 percent-plus expansion in Beijing and Shanghai.
General Motors, newly emerged from bankruptcy protection yesterday, was eager to show the world that it is again firmly in the driver’s seat.
CEO Fritz Henderson unveiled a slate of corporate changes that he said will revolutionize the company, get it building cars and trucks that customers want and bringing them to market faster than before.
"We recognize that we’ve been given a rare second chance at GM, and we are very grateful for that. And we appreciate the fact that we now have the tools to get the job done," Henderson said at GM headquarters in downtown Detroit.
"If we don’t get this right, nothing else is going to work. Business as usual is over at General Motors."
He made the comments just hours after the corporation closed the sale of its good assets to a new carmaker, General Motors Co., that is 61 per cent-owned by the American government. U.S. President Barack Obama was instrumental in nudging the GM Corp. into bankruptcy, extending billions of dollars in federal assistance to the automaker and rejecting its first restructuring plan as inadequate.
The fanfare was met with warnings from long-time industry observers that GM still has a long road ahead.
"This is day one. General Motors faces a massive challenge that we won’t know the result of for probably three to five years," industry expert Dennis DesRosiers said. "There’s as good a chance that we go through this again in that period as them coming out of this to `thrive and survive,’ as Mr. Obama says."
GM’s official exit from its 40-day exile in bankruptcy went largely as expected – with the exception of a gaffe with eBay.
Henderson said that GM would team up with eBay in California to allow consumers to bid on vehicles just as they would in a typical eBay auction. Hours later, eBay said that no deal has been finalized. A spokesperson for GM explained that the companies are in discussions and a partnership deal is expected soon.
The company’s square blue-and-white logo will remain the same. Some media reports had suggested it would be turned green to symbolize an automaker that is focused on fuel efficiency and less environmentally damaging products 16 pt business cards.
Here in Canada, Industry Minister Tony Clement reiterated Ottawa’s support for the bailout.
"We are confident that the company will now be in a position to operate a sustainable and viable business that will keep production, innovation and jobs in Canada," he said in a statement.
"This is good news for Canadian Auto Workers, the Canadian auto-parts supply chain and for Canadian consumers."
Others are anxious to relegate GM’s pit stop in bankruptcy court to the rear-view mirror,
Mike Carmichael, general manager of City Buick Pontiac Cadillac, expects to get new models into his showroom in the next month or two. "Once those products start to be received in the market, I’m sure the stigma [of bankruptcy] will eventually go away. Now we can say, `Okay, let’s go.’"
Among the major changes announced by Henderson yesterday:
White-collar employment will be reduced by 20 per cent, or 6,150 positions, by the end of this year. That includes 450 executive jobs;
A single, eight-member executive committee will replace two senior leadership forums. This is meant to speed up day-to-day decision-making;
Bob Lutz, a legendary industry executive, will become vice-chairman responsible for creative elements of products, marketing and customer relationships;
A new "Tell Fritz" website will allow GM owners and the public to share their concerns directly with senior management.
GM’s new 13-member board, whose majority will be new directors, including one from Canada and one from the United Auto Workers union, will be in place in about three weeks.
In a viability plan presented to the government, GM said it would break even before interest and taxes next year and be slightly above that for 2011, before taxes.
The company’s aim is to generate enough cash to repay billions in government loans ahead of a 2015 deadline.
With files from the Star’s wire services
The price of nearly one in four U.S. homes for sale on July 1 had been sliced at least once since landing on the market, data compiled by real estate website Trulia.com showed on Friday.
Prices were cut by an average of 10.4 percent from the original price, or $41,655 of a median house price, Trulia.com said in a report obtained by Reuters prior to its scheduled release.
Detroit, Las Vegas and Miami had the biggest price reductions, down by an average of 21 percent, 16 percent and 15 percent, respectively, the data showed.
As of July 1, a total of 24.6 percent of homes had seen their prices cut, up from 23.6 percent the previous month.
The lowered prices, however, are not necessarily a negative.
“Price reductions will help stabilize the overall market,” Pete Flint, Trulia co-founder and chief executive, said in an interview with Reuters.
“Buyers are still waiting for sellers to become more realistic about their asking price and when that occurs, buyers are swooping in,” he said. “The good news is sales continue to increase and with the prices continuing to drop, inventory levels will drop as well new car loans.”
Nationwide, total reductions for all homes for sale on the market on July 1 was $27.1 billion, Trulia said.
Of luxury homes, or those costing $2 million or more, 24.3 percent have seen a price reduction, with an average reduction of 14.4 percent off the original asking price.
For homes costing $2 million or less, 24.4 percent have been reduced in price, with an average price drop of 9.5 percent, the data showed.
“The luxury market will be the last area to rebound,” Flint said. “Most active buyers today are investors and first-time home buyers and they are not interested in the luxury market.”
Of single-family homes for sale, 26.9 percent have seen at least one price reduction and the average reduction was 9.8 percent. Among condominiums for sale, 28.2 percent have been reduced in price at least once and the average reduction was 10.5 percent, the data showed.
(Editing by Leslie Adler)
Four employees of Australian miner Rio Tinto have been arrested in China on charges of stealing state secrets, the official Xinhua news agency said on Thursday, citing Shanghai state security authorities.
The suspects included Stern Hu, an Australian national and general manager of the company’s Shanghai office, who was also in charge of Rio Tinto’s iron ore business in China, Xinhua quoted the Shanghai municipal state security agency as saying cash advance payday loans.
“The case was being investigated according to law,” Xinhua said. It gave no further details.
Rio Tinto declined to make any immediate comment on the arrests.
(Reporting by Tom Miles and Benjamin Kang Lim; Editing by David Fox)
U.S. earnings may not perform a turnabout in the second quarter, but expectations finally are looking up, suggesting financial statements could hold more than the usual share of surprises from prominent companies.
For the quarter, earnings are still expected to decline sharply from the year-ago period. Data compiled by Thomson Reuters shows analysts expect a decrease of about 36 percent in Standard & Poor’s 500 corporate earnings from a year earlier, which would mean no improvement from the first quarter.
But the early indication from companies and the recent trend in analyst revisions suggest that forecasts have finally bottomed out, possibly opening the door to stronger performances going forward.
That could bode well for stocks, which have rallied from 12-year lows in March on hoped-for signs of an economic rebound. The rebound in stocks presaged an upturn in earnings expectations, which started to improve in mid-May.
“The expectations are such that we’ll have more surprises to the upside than to the downside,” said Maury Fertig, chief investment officer of Relative Value Partners in Northbrook, Illinois.
Aluminum company Alcoa Inc, whose results on Wednesday will kick off the season’s reports, is expected to post a third consecutive quarterly loss. If there is going to be earnings strength, it is not likely to come from the materials sector, which is expected to show a year-over-year decline of 79 percent, according to Thomson Reuters.
A ROSIER PICTURE?
But earnings projections have seen an upward trajectory. Estimates for six of the 10 S&P industry sectors have been revised higher over the past four weeks, according to researchers at Birinyi Associates Inc cashadvance., led by the consumer discretionary sector, although much of the change has to do with the removal of General Motors Inc from the index.
Others revised higher include consumer staples, technology and telecommunications.
This trend could result in a higher-than-usual percentage of companies exceeding estimates, which has averaged 66 percent, according to Thomson Reuters.
Analysts seem less inclined to slash estimates, said Dirk Van Dijk, analyst at Zacks Investment Research in Chicago.
“We have been noticing recently there have been more positive upgrades to estimates than cuts,” he said.
There have been fewer warnings by companies as well, said John Butters, director of U.S. earnings for Thomson Reuters, noting that these changes may indicate a bottom in the earnings downturn.
The same can be said for actual results so far. Headed into the week, of the 23 S&P 500 companies that had reported results, 18 had exceeded expectations, according to Zacks. Should that continue, it could heighten the appeal of equities after stocks stumbled through most of May and June.
“The recent news is encouraging,” said Burt White, chief investment officer at LPL Financial in Boston. “We’re starting to see better-than-expected pre-announcements, which bodes well for the quarter.
A U.S. Securities and Exchange Commission lawyer warned about irregularities at Bernard Madoff’s financial management firm as far back as 2004, The Washington Post reported on Thursday, citing agency documents and sources familiar with the investigation.
Genevievette Walker-Lightfoot, a lawyer in the SEC’s Office of Compliance Inspections and Examinations, sent emails to a supervisor saying information provided by Madoff during her review didn’t add up and suggesting a set of questions to ask his firm, the report said.
Several of the questions directly challenged Madoff activities that turned out to be elements of his massive fraud, the newspaper said.
Madoff, 71, was sentenced to a prison term of 150 years on Monday after he pleaded guilty in March to a decades-long fraud that U.S. prosecutors said drew in as much as $65 billion.
The Washington Post reported that when Walker-Lightfoot reviewed the paper documents and electronic data supplied to the SEC by Madoff, she found it full of inconsistencies, according to documents, a former SEC official and another person knowledgeable about the 2004 investigation payday loan no faxing.
The newspaper said the SEC staffer raised concerns about Madoff but, at the time, the SEC was under pressure to look for wrongdoing in the mutual fund industry. Walker-Lightfoot was told to focus on a separate probe into mutual funds, the report said.
One of Walker-Lightfoot’s supervisors on the case was Eric Swanson, an assistant director of her department, the Post reported, citing two people familiar with the investigation.
Swanson later married Madoff’s niece, and their relationship is now under review by the SEC inspector general, who is examining the agency’s handling of the Madoff case, the Post reported.
Swanson, no longer with the agency, declined to comment, the Post said.
SEC spokesman John Nester also declined to comment, citing the ongoing investigation by the agency’s inspector general, the newspaper said.
(Writing by JoAnne Allen; Editing by Eric Walsh)
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