Harmonizing to The International Monetary Fund ‘s ( IMF ) study, China has been one of the biggest economic along with the United State ( U.S ) , Japan and Germany ( World Economic Outlook, 2006 ) . Furthermore, the fast velocity of growing economic system attracted many foreign investors taking China as one of the most of import markets and set big amounts of capital into China market, taking the monetary value of stock and existent estate markets acquiring higher and higher.
Before 1949, the existent estate market in China was a system of state-owned endeavors ( SOEs ) , and boulder clay 1988 China ‘s Constitution was changed to allow transportation of state-owned land-use right in1988. Before that, there was no existent estate market and private ownership in China due to the houses and belongingss were owned by China authoritiess.
Fung et Al ( 2006 ) described after China authorities opened its door to the universe in 1978, cardinal jobs among the old lodging allotment system recognised by a more market-oriented authorities which were: ( 1 ) it was non equal to pay for needed care and building costs due to the low rental rates ; ( 2 ) demand growing far outpaced public assistance building due to miss of financess ; ( 3 ) big amounts of lands were fresh due to un-efficient governments ; ( 4 ) the environment of corruptness and maltreatment power led unjust lodging allotment patterns wild. Harmonizing to those job, the China authorities decided to reform, by taking some metropoliss for experiment the “ One-Third Housing Sale Model ” , in which the authorities, state-owned endeavors ( SOEs ) , and persons each bore tierce of the building and care costs for new units. However, the comparative low income degree and other economic factors, that experiment of reform could non success.
Rao and Zhou ( 2010 ) studied China ‘s existent estate market, and focused on the existent estate market development from 1998 to 1999, they indicated that after the existent estate market reformed, the trade good lodging replaced the state-provided lodging in lodging market. Most private belongings companies built and sold the trade good houses to middle or high income groups. In the early 2000s, China experienced the inflow of “ hot money ” into domestic sectors – it has been reported that this can non be explained by trade excesss or foreign direct investing ( Prasad and Wei, 2005 ) . Martin and Morrsion ( 2008 ) indicated that the hot money fluxing into China from 2003 to the first one-fourth of 2008 amounted to about 1.75 trillion dollars, or 104 % of China ‘s entire foreign exchange militias by the terminal of March 2008. Meanwhile, the lodging monetary values from 2001 to 2004 increased stably, and lodging monetary values in Shanghai have been increasing well, and mean monetary value in urban and suburban parts has exceeded RMB 10,000 ( about US $ 1,200 ) per square meter ( Fung and Zhang, 2006 ) . As can be seen on Figure 1, it shows that the China existent estate development index from 1997 to 2009.
Hong Kong is one of the most of import capital markets after London, New York and Tokyo. It could be argued that Hong Kong as the most liberalised markets in Asia due to the function of chief colonial trading port of the western developed states prior 1997. After the return of Hong Kong to China, the mainland Chinese authorities was wary of intercession in the working of the lightly-regulated Hong Kong fiscal markets.
Real estate marke
The first beginning of Hong Kong existent estate market can be traced to the clip that the universe war 2nd finished. The authorities encouraged people to mend and reconstruct their place, and at the same clip, the authorities invested immense sum of public flats in order to cover with the deficiency of houses during that clip.
After 1970s, the economic system in Hong Kong grew up really fast, and its developed connecting to the planetary market. Meanwhile, the China was sing in a economic reappraisal, the closed and particular relationship between Hong Kong and China, Hong Kong became a channel communication to China.
The existent estate market is one of the most of import markets bettering the Hong Kong market. Chau et Al. ( 2001 ) had described some factors that the existent estate market contributed to Hong Kong economic system. For case, during 1984 to 1996, there were 14 to 29 % of stocks were comprised by existent estate companies. Furthermore, those non-property companies were besides affecting in existent estate investing and development, particularly the pudding stones. Therefore, the existent estate market in Hong Kong normally correlates to the public presentation of stock market. Tse ( 2001 ) besides indicated that the existent estate industry is a major factor impacting the stock monetary values. Many investors would wait the comparative existent estate intelligence before purchasing or selling portions for short-run determination.
The existent estate market was making to the extremum in 1997. However, the house monetary value was affected by the 1997 Asiatic fiscal crisis. Furthermore, during 2003, China, Taiwan and Hong Kong had experience SARS, the house market was dropped to the lowest point than of all time as can be seen on figure 2.
The existent estate market in Taiwan has experienced three times peak since 1970s, Chen ( 1990 ) indicated that the Chinese lodging market was significantly affected by the oil crisis, doing high rising prices and high monetary value of stuffs between 1972 and 1980, and was mostly responsible for the fluctuation of house monetary values in Taiwan this period. Other extremums in this house market occurred in 1987-1988, and the ground behind this roar, can partially be attributed to low involvement rate and extra money supply due to abundant capital influxs which is thought to be the demands of investing.
Harmonizing to indicants in the Chen and Patel ( 2002 ) survey, old Chinese surveies suggested the determiners of lodging monetary values are chiefly: money supply, stock monetary values, trade good monetary values, involvement rate and income. The first two factors listed implicate the demands of investing as impacting the lodging market ( Chen and Patel, 2002 ) .
The prevailing gross revenues scheme engaged in Chinese building companies for newly-built flats is known as ‘pre-sale ‘ , and involves the clients buying and paying for belongingss before building has begun. In recent decennaries, pre-sale has became one of most popular investing for many investors and spectaculars due to the 20 to 30 % of entire sum paying in hard currency, and the remainder of sum can be leveraged from bank. Furthermore, there are about 15 % are paying as episode during building period. As the belongingss located in high-value location, the purchasers ( the investors or spectaculars ) can sell the belongings without dealing revenue enhancement before its completed due to the official ordinance that the belongings merely can be revenue enhancement after registered.
Taipei as the fiscal Centre in Taiwan, the house monetary values in Taipei are the highest 1 in Taiwan, and most of building companies apply the pre-sale scheme. Due to the limited land in Taipei, the house monetary values are acquiring higher twelvemonth by twelvemonth. However, the planetary fiscal crisis of 2007-08 led the house market reached to the lowest point since the SARS period in 2002. Despite the fact that the Chinese authorities decreased the involvement rate in order to excite the fiscal market, the depression still last one twelvemonth.
In Taiwan, the national economic system has become progressively intertwined with that of China due to the betterments in cross-strait dealingss since the election of Ma Ying-Jeou as president of Taiwan in 2008. The improving and closening relationship with China has and continues to excite economic growing in Taiwan
In add-on, as a consequence of new policies, such as the gap of some Chinese industries for Chinese investing, and the ECFA ( cross-strait economic understanding ) , abundant capital influxs were seen in Taiwan while most other states were still enduring from the worst consequence of the 2008-2009 planetary recession.
The stock market was foremost introduced to Taiwan in 1962. At the beginning, it was non popular until 1990, the Chinese economic started turning, the apprehended Taiwan dollars and the cancelled foreign exchange control attracted more investors into the stock market. The highest point was reach to the historical extremum 12495. However, the unstable political environment and the depressing in Taiwan, the stock market dropped to a doomed of 80 % .
The stock markets in China were established in 1990. Although it had been reached highest point during 1996 to 2001, the authorities employed macro-control in order to keep the over-heated economic system. After had been bear market for four old ages, the China authorities had stock reform in 2005 due to the some cardinal jobs when the stock market foremost introduceda‘ . This reform led all stock can be traded and attracted investors into China stock markets. The Shanghai stock market had the highest point in October 2007, the Shanghai Composite index ( SCI ) was up to top out of 6100 points, and a addition over 500 % since the SCI dropped to 998 in June 2005 ( He, 2008 ) .