from Wolf Street:
China is celebrating. It’s showing off military hardware. Chinese markets are closed. Finally, folks around the world can focus for a few days on things other than China’s slowing economy and strong-arm methods to stops stocks from plunging further.
But there’s something happening in Hong Kong with a sense of foreboding for China and other places around the world: As stocks swooned, home sales in August plunged.
Hong Kong’s stocks got swept up by the China stock market bubble. In May 2014, the Hang Seng was at 22,000, made its way to 24,000 by March 2015, then soared 18% in six weeks, to 28,442 by April 28. Participants were getting richer by the minute. But then it dropped and now sits at 20,934, down 26% from its April peak, down 12% in August alone, and back where it had been for the first time in May 2007.
Mainland Chinese stocks fared worse, with the Shanghai Composite crashing 39%. Wealth has evaporated into the ether at a stunning speed, and all the fun has been leeched out of it. But it’s not just a game.
There are consequences. For example, the Mandatory Provident Fund that covers 2.5 million workers lost 5.6% in August alone, according to the South China Morning Post. And it also hit the housing market.
In August, home sales in Hong Kong plunged 27.8% from a year ago, to 3,896 units, according to the Land Registry. Total sales value dropped 30.3% to HK$31 billion ($4 billion).
But developers that cut prices and offered big incentives were able to unload their units.
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