China ETFs: Bubbling Up: Financial News - Yahoo! Finance
...any number of things can start the trouble: the Chinese banking system is famously riddled with non-performing loans. Property values have skyrocketed in comparison with wages. Chinese borrowers in Shanghai now regularly commit over over 50% their earnings to paying mortgages. Capital in China is often allocated for social and political reasons rather than economic efficiency.
The artificially undervalued yuan skews the economy to export, depressing domestic demand... the yuan remains 40% or more undervalued. The positive side of this for investors is that yuan-denominated assets will be worth more as the yuan is allowed to appreciate. The risk is that so-called hot money is already chasing this trade.
Monday, April 23, 2007
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