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Singapore REMA


Gross Domestic Product (GDP) grew by 2.1% in the second quarter, but it is lower than
the forecasted figure of 2.2%. It is expected that the performance for the second half of
the year will be like the first half, with an average growth of 2.2%. However, there is
some hope in that strong seasonal demand in year-end can boost the manufacturing
and service sectors output. It is anticipated that an increase in public infrastructure and
housing construction will alleviate potential technical recession.

Given that Singapores SIBOR rates are pegged to US Fed Fund rates, an impending
interest rate hike could increase cost of borrowing. China being Singapores second
largest trade partner, its slowdown in growth has also negatively impacted the local
economy. Based on the Key Household Income Trends 2016 report, the median
household income from work grew by 2.1% nominally from $8,666 in 2015 to $8,864 in


In 2015, Singapore stood fifth in Christies Index rankings for the worlds top performing
luxury property markets. Despite the pessimistic outlook of the overall residential
sector in Singapore, the prices of prime residential properties rose sharply in Q1 2016.
According to the Knight Frank Report for Prime Global City Index 2016, Singapores
luxury home prices was found to rank eighth in terms of largest growth, and these
values in Q1 2016 were an appreciation by 5.4% from the previous year.

Private residential property index fell 1.5% to 137.9 points in Q3, widening the 0.4%
decline recorded in Q2. Since the prime and luxury residential market peaked in 2011,
there has been a 15 to 25% fall in prime and luxury residential prices in Singapore,
resulting in these properties attracting many ultra-high-net-worth investors. (CNBC
News, 2016). However, according to JLL, implementation of cooling measures resulted
in a fall in foreigner purchase from 20% in 2011 to only 10% percent in 2016.

Despite so, the total transaction volume of high-end homes increased by 22.3 % Y-o-Y
to 767 units in Q2 2016. Among the three market segments, the CCR experienced the
largest decline in unsold inventory over the five-year period, with a 60% increase in
sales Q-o-Q.

Approximately 46,800 private homes are slated for completion by end 2020. Most of
the units are in the OCR, while the CCR is projected to constitute only 16% of this
upcoming completion.
There will be a lack of new supply of new prime luxury residential as the private home
market is in the doldrums. However, with the market slowly recovering, the prime
market may be able to stabilise first. Several developers have taken the approach of
waiting out their sales by constructing the development close to completion before they
market the development as a high-quality, top finishing product when the market is
ready to absorb the new supply. One such example was GuocoLands Wallich Residence
at Tanjong Pagar Centre. This strategy was also to avoid the penalty in the form of
extension charges imposed by the Singapore government on developers who hold
onto their completed projects for more than two years, where the penalty increases
with every year.

Office vacancy island-wide fell from Q4 2015 to Q1 2016, as there were no new office
completions in Q1 2016. However, overall rents declined for the fifth consecutive
quarter by 2.9% Q-o-Q, as landlords compete to secure tenants. Premium and Grade A
rents are expected to dwindle to 10% till end 2016. Grade B buildings are also facing
challenges in retaining their high rentals.

Figure : Singapore Office Pipeline

With 4 million sqft of supply in the pipeline for next 5 years, an upsurge of new office
stock is expected. However, apart from the renovation of the CPF building due to
complete in 2020, majority of the offices scheduled for completion beyond 2018 are
located in suburban areas. Future pipeline supply is expected to decrease.

Based on JTC, vacancy rates across the different types of industrial property fell in 4Q
2016, but remain high for Business Parks and Multiple-User Factories. Price index for
industrial property has also declined

Market Outlook
Unfavourable market conditions persist due to ongoing residential cooling measures.
Even though investors begin to adopt a long-term approach towards cooling measures,
despite decent sales performance of several recent launches due to locational
attributes, general outlook for residential market remains pessimistic. HBLs specializes
in luxury residential properties, which are mainly targeted at foreign buyers as they
cannot purchase other residential types. The targeted approach of cooling measures
thus proves detrimental to further development in this sector. Furthermore, the
emergence of many contractor-turned-developers and foreign developers also
increased competitiveness of land-bidding, which subsequently hurts profit margin in a
market downturn.

For the office market, a flight-to-quality trend is evident from contract renewals in Q3
2016, where companies have expressed preferences for higher grade offices with
modern facilities despite of closely-similar locational attributes. In the short term, office
glut will be compounded with a growing amount of secondary space being returned to
the market due to downsizing trends. Coupled with upcoming new office supply, there
will be an oversupply of office space, thus it is not advisable for HBL to venture into this
sector. For the industrial market, outlook seems bleak as the vacancy rates remain high
and the available stock is not met with a corresponding demand. Coupled with recent


The Victorian State Final Demand (SFD), which is a measure of the states demand,
declined by 0.4% in 2016. The population in Victoria region has grown by 2.1%,
significantly higher than the national average of 1.4%, driven by strong overseas and
interstate migration. Apart from a decreasing unemployment rate, there is also an
increased proportion of white collar job employment by 3% compared to 5 years before.
This would imply that a larger proportion of the working population earns a higher level
of income.
For the Queensland region, the population has grown by 1.2%, with an 80% increase in
interstate migrations. Its unemployment rate is at 6.3%, an improvement of 0.3%
despite still being above the national average of 5.8%. However, as compared to an
overall fall of national SFD, Queensland was one of the four regions which registered
positive growth.


For the Melbourne market, a vast majority of over 50% upcoming completion in 2016
resides in Melbourne CBD, with 21,246 apartments currently under construction. In
terms of sales volume, it has decreased by 13.6% Y-o-Y at 2637 units, accompanied by
a slight price drop of 0.1% in Inner Melbourne. From recent sales, boutique apartment
types are showing strong demand. Developers are shifting towards construction of
boutique apartments to target owner-occupiers, as these apartments offer a lower
absolute price quantum and are thus more affordable.

In 2017, Melbourne sees the largest amount of units under construction. Excluding
projects that are seeking planning approval, upcoming supply pipeline fluctuates at
around 10,000 units each year, with several projects currently being marketed.
However, with major banks limiting lending to developers, it may be harder for
developers to proceed to the construction stage, potentially reducing apartment supply
in future.

The Inner Melbourne market is also being overwhelmed by foreign developers, due to
their ability to bring in a larger pool of investor buyers. In 2017 alone, there is an
estimated 1,760 apartments by foreign developers due for completion. They also tend
to bid more aggressively for land, given the scarcity of residential land in Inner
Melbourne. On average, foreign developers bid 49.7% higher than their local
counterparts. As such, local developers have resorted to either bidding in outer areas of
Melbourne or establishing capital partnerships with offshore developers.


In the Brisbane market, majority of completions in 2016 resides in the Inner-North and
Inner-South precincts. The 12,200-unit pipeline due from 2017 to 2019 enjoyed a strong
take-up rate of 76%. 2017 will see the largest amount of units under construction.
Beyond that, a significant portion of supply pipeline remains in the stage of plan
approval or marketing. In terms of rental prospects, rental yield has softened by 0.12%
due to the continuing inflow of investor-style apartments into the property market. Only
one-room apartments have registered growths in rental yield. Despite so, gross rental
yields in Brisbane still measure at 5%, high above that of Sydney and Melbournes, as
seen in Figure X.

We also see pessimistic sentiments exhibited in site purchase behavior by developers.

As compared to over $800m worth of transactions in 2014 and 2015, the transaction
quantum has fallen drastically by 83% to $131m in 2016. This shows a fall in demand
for parcels in Inner Brisbane, likely due to the impending surge in supply pipeline.


In Gold Coast, 2,496 apartments were approved from 1Q 2015 to 1Q 2016, 2.2% less
than the previous year. 5,600 apartments are currently under construction in Gold
Coast Central, Broadwater and Coastal Fringe precincts. Take-up rate increased by 4%
Y-o-Y, showing positive demand in the market. Gold Coast still manages to attract both
domestics and international investors and developers. Demand remains high, and the
citys rental vacancy rate is kept at a good 1.5% margin under the market average of
3.0% as at Q12016. This is attributed to its apartments staying relatively affordable,
and its sustained high-performing rental growth rates and yields. Rental rates rose for
all types of unit spaces, but the balloon of future supply emerging from the pipeline
would curb these rising values in the medium to long term. This is especially so from
the construction of Commonwealth Games Village, which will be converted to a 1252-
unit residential project after the games are held.

For all three markets in Australia, there seems to be an impending oversupply in the
housing market. The tightened restrictions of financial institutions will play both a
restricting and regulating role, causing current supply to be cleared more slowly but
also smoothing out the boom in housing supply, as developers adopt a wait-and-see
approach. Developers will possibly resort to land-banking and hold on to vacant sites, in
order to avoid project completion coinciding with the market down-cycle. The low
interest rate environment also plays a contributing factor in this phenomena.

In the longer term, housing supply in Melbourne may be most affected, as curbed by
various measures. The implementation of Better Apartment Design Scheme (BADS)
stipulated minimum communal space and other limiting guidelines, which inadvertently
reduces the number of units which can be built on a project. This will lead to smaller
development sizes being proposed and reduce profitability for developers, although it
does provide potential for USPs to be featured during the marketing phase. Besides,
site purchases by student accommodation providers also signal a rise in this asset
class, which poses direct competition with traditional apartments due to their cheaper
rental costs.

The Brisbane market may face more stagnation as seen from lesser site acquisitions, as
well as the large proportion of sites in initial stages of marketing or approval. It is likely
to delay beyond 2020 before the supply pipeline comes back on track. The shift
towards providing housing for owner-occupiers may also cause rental yields to fall
further. Vacancy as a result may go on an upward trend as it favors tenants.

The Gold Coast will see an oversupply in residential apartments in Gold Coast,
especially in the Gold Coast Central Precinct, where the State Government has
delegated Southport to be a Priority Development Area (PDA).

Given unfavourable market conditions and strong competition in the Inner Melbourne
market, where housing demand is strongest due to its accessibility to CBD, HBL should
not continue development in Melbourne for the time being. The lack of land-holding
restrictions allows developers to wait for more opportune times for development, and
bidding for residential plots now will be fierce, incurring high land costs. Despite that
Melbourne is a matured market with strong demand, revenue generation may be slow
and result in HBL tying up a huge chunk of its capital in the Melbourne market,
hindering its pursuance of other growth opportunities.

To cater to the growing population, developers may instead shift their focus to the
outside of the Gold Coast Central area, where owner-occupier projects are more
prevalent, and where demand is more stable and easily anticipated. Overall, despite
tight credit lending controls, both owner-occupier and investor demand remains strong
in Gold Coast in the short run, as business conditions are still relatively favourable.

Brisbane, being Queenslands largest mining town, is a resource-dependent city.

Despite adopting a shift towards tourism economy by the Australian government, its
resource dependency cannot be eliminated over a short period of time, as seen from its
25% contribution to Brisbanes GDP. With protectionism measures from the Trump
regime, there might be a fall in resource exports, hurting the Brisbane economy. We
expect the economy and population to adopt a slower growth, resulting in the lack of
demand for housing in this market.

GDP figures have showed that the UK has been rather resilient after Brexit, registering
a 0.6% GDP growth in Q3 2016 and approximately 0.5% in the last quarter according to
Reuters. The Purchasing Managers Indices (PMIs) showed some growth in the
construction, manufacturing and services sectors towards the end of 2016. However,
economists predict that GDP growth will slow in 2017 since a weakening pound will
increase import costs and Consumer Product Index (CPI) inflation rate, thus reducing
purchasing power and dampening sales profits.

According to the Office for National Statistics, employment rate fell slightly from 74.5%
to 74.4% after the Brexit vote and unemployment rate remained at 4.8%, a fall from
5.2% in 2015. London registered a higher than national average unemployment rate of
5.6% while the South East had the lowest rate of 3.4%. Although the labour market
seems to be strong despite the Brexit vote, economists expect unemployment rate to
rise in view of the general economic slowdown, higher business costs and falling

After since the UK Referendum, the residential market in the UK has been experiencing
slower price growth with London registering its first below-national average growth of
3.7% since 2008. In general, buyer demand has been improving, with the mid-range
market experiencing more movement and uplift. There is also a growing popularity for
homes and Purpose-Built Student Accommodation (PBSA) in the Private Rental Sector
(PRS), due to the reduced affordability of Built-for-Sale (BFS) homes.

On the supply side, the market remained stagnant for the 9 th consecutive month. Rising
building costs, labour constraints and general economic uncertainty have pushed
homebuilders to be more risk-averse. Overall, price growth in 2017 is likely to be
weaker than 2016 in light of slower growth across South East. Transaction activities in
the outlying boroughs and city fringes in London are expected to perform well while
sales in prime districts may pick up in 2018.

In general, the office sector in UK has been faced with slower rental growth with
vacancies on the rise. The fall in demand for office spaces, coupled with a significant
grey space add-on, will likely suppress any potential rental growth. Average transacted
lot size has been falling and this trend of downsizing is likely to continue as firms
grapple with a weaker economy. Multinational corporations and financial services firms,
mainly located in central London, are possibly the worst hit sectors as they may need to
relocate certain operations to continue business in the EU.

However, prime office spaces in central London are still relatively more resilient to
economic uncertainties following Brexit. Although offices in regional markets are also
affected by lower demand, they seem to be more insulated against Brexit thus offering
more attractive return profile than those in London.

There is a sustained rental growth UK-wide amid the lack of availability of industrial
spaces, especially for Grade A distribution warehouses exceeding 100,000 sqft. Much of
the demand is driven by the retail distribution and manufacturing sectors, due to the
rising online retail activities. The weakening sterling is also widening the demand base
across other industrial uses. Despite the economic uncertainty, Savills analysts believe
that this sector is likely to outperform the general market given low supply and high

Currently, Parliament View apartment is HBLs only residential property in the UK which
is located in central London. As Mr Chua Thian Poh, HBLs Chairman and CEO, hopes to
explore into the development sector to diversify its existing 100% investment portfolio,
our team recommends HBL to tap into the PRS and mid-range residential market and
provide smaller units. Oven-ready sites in London, especially those near transport
nodes and universities would be prime sites for development. Given the strong demand
in those 2 markets, especially in PBSA, this optimistic trend most likely suggests a
profitable venture and it would be a great starting point if HBL wants to venture into the
development business in the UK.

The office sector remains relatively weak after Brexit, as compared to other property
sectors and price and rent growth may take some time to recover. HBLs Grade A office
buildings in central London (39 Victoria Street, 110 Park Street, 60 St. Martins Lane and
1 St Martin's Le Grand) should remain resilient to economic uncertainty and see rents
and capital values gradually improve.

As for HBLs only office building in West End London, Apollo and Lunar House, they may
not perform as well since current faade may pale in comparison to its neighbours
given that the buildings last phased refurbishment was in 1995 and 2000. HBL may
want to consider divesting Apollo and Lunar House to generate capital for other more
profitable investments. It is not advisable for HBL to purchase new properties in the
near term in view of the weak office market.

Since HBL has experience in industrial development, the firm can take advantage of the
demand-supply gap for large-scale industrial spaces and venture into the market.
Moreover, the rising trend of e-commerce will create sustained demand for warehouses
from online retailers.

In all, given the large degree of ongoing uncertainty, the team believes that a well-
diversified portfolio that span across the residential, commercial and alternative sectors
across the UK is the most optimal approach. However, since it is expected for the
sterling to fall further in the near term, it is advisable for HBL to delay its UK plans and
the recommendations above to a further date, possibly beyond a 5-year horizon. This is
a risk-averse approach given the lingering economic uncertainty following Brexit and
the suppressed rent and price growth across most property sectors. It would be better
for HBL to take a wait-and-see approach before further venturing into the UK market.

Summary of Commercial Opportunities in UK

Summary of industrial Opportunities in UK

Summary of Residential Opportunities in UK

Retirement Village
Ho Bee shouldnt give up its on capitalizing its core business which is to develop
luxurious residential housing locally. However, due to the implementation of the
cooling measures, market is in a
Ho Bee must identify new pent-up demand in the niche market sector if it wishes
to continue to make use of its core skillset to develop in Singapore
One specific sector is specialized housing for the elderly in the time of growth of
the silvering generation. Bring in population rema, refer to senior dissertation.
Alternative housing
o Retirement Village
Define. refer to senior dissertation.
State the differences between them
Isnt there studio apartment widely available for senior citizens, why
do we still need RV? Who is targeted audience? Elderly who wishes
to live independently and actively, wishes to live in an elderly
friendly environment, wishes to have the convenience of health care
Demand drivers: pent up demand, insufficient supply mismatch
of demand and supply, REMA
Possible to hold as an investment asset with recurring income?
Elderly may prefer to rent than buy a unit as an unit purchase will
tighten their cashflow. This is in line with the goal of venturing into
private rented sector (PRS)
Conclusion. Niche market, immature sector in Singapore, enter early
to gain a foothold. Ho Bee has halted its development activities in
Singapore since 201x, this is not a good sign for Ho Bee. The good
image and reputation which has already forged into peoples mind
may fade off over time, and so such a development will also help to
refresh people memory of Ho Bee.
Where should Ho Bee diversify to?

Source: Consensus Economics

The economic outlook for major Asia-Pacific markets remains relatively healthy, with
overall regional growth estimates for 2017 upgraded slightly to 4.6% in the third
quarter. This was led by improved forecasts in Australasia India, which helped to widen
the regions expected outperformance over North America (2.2%) and the euro zone
(1.3%). However, with the surprise victory of Donald Trump in the US presidential
elections in November, there is now some potential for a stronger US domestic
economy at the expense of global trade.

Uncertainty over US trade policies could lead to a re-assessment of regional

performance but the actual impact could be drawn out, so there are strong grounds.to
remain optimistic, not least because of growing intraregional trade.

China looks set to report GDP growth of 6.7% for 2016, with a slight increase in
commodity demand helping to soothe nagging worries over a possible economic hard
landing. Fears of stock market and housing bubbles in China continue to rank among
the biggest risks to the Asia-Pacific economy because of the financial systems
escalating debt levels. Non-financial debt in China has risen to more than 250% of GDP
from 150% in 2008 and smaller Chinese banks have extremely high loan to deposit
ratios that put them at risk if non-performing loans increase. Much of Chinas positive
economic outlook, and perhaps the worlds, rests on the belief that the Chinese
government has the financial strength to support any crisis.

In addition to domestic issues, recent political and economic relations between the US
and China appear to have worsened and any negative ramifications could potentially
affect the global economy.

Economic situations across individual markets continue to diverge. In Australia, Sydney

and Melbourne are growing strongly on the back of record-low interest rates and a
housing boom. Infrastructure construction and residential redevelopment in the Sydney
and Melbourne central business districts is driving real output growth, along with
related business and professional services such as legal and real estate, etc. Consumer
sentiment has received a huge boost from the ongoing surge in residential prices, up
over 30% since 2013. Meanwhile in Brisbane, and particularly Perth, economic
conditions remain soft, despite improving commodity prices. Even as commodity
demand picks up, incremental investment from this sector appears unlikely. With some
firms still facing financial difficulties, bad loan risks are still high, so Australian bank and
sovereign credit ratings face potential downgrades.

South Korea has also seen a gradual pick-up in growth, driven by low interest rates and
the governments fiscal efforts, including the latest KRW10trillion (US$8.5 billion)
stimulus package. But doubts remain over the Korean recoverys sustainability, given
fluctuating industrial and manufacturing output reports over the course of 2016. Labour
strike issues and the impeachment of the countrys president have further clouded
Koreas economic outlook.

Two of Asias key global cities Singapore and Hong Kong continue to face strong
headwinds as they struggle through their respective structural problems. Singapores
government GDP guidance fell further to the lower end of the 1-2% official estimate
after economic data for the third quarter showed some weakness in the manufacturing
and industrial sectors. Recent defaults by oil and gas service companies and persistent
weakness in the shipping industry have played a part in keeping consumer sentiment
muted. 2017 growth forecasts also look soft. The governments drive to attract higher
value manufacturing and technology companies to help offset weakness in the ailing
financial sector faces strong competition globally.

Slower Chinese growth plus growing competition from mainland Chinese hubs Shanghai
and Shenzhen are part of the structural shift that Hong Kong faces. Political uncertainty
also appears to be rising again, two years after mass pro-democracy protests erupted.
Pro-Beijing and pro-democracy camps are raising the stakes ahead of elections in March
for the Special Administrative Regions chief executive. The uncertainty over Chinas
reaction has kept some business decisions on the side lines.

The near-term economic outlook for the Asia-Pacific region is likely to remain uncertain
following this years surprise UK vote to leave the European Union as well as the
unexpected US election result. A Trump administration could potentially be positive for
the domestic US economy but global trade now appears to be more at risk as potential
changes to trade agreements could hurt Asian exports. More uncertainty lies ahead in
2017 with much of mainland Europe going to the polls and Asian geopolitical tensions
on the rise. However, we remain optimistic in the long-run and expect the Asia-Pacific
regions consumption outlook with the middle classes expanding rapidly in China,
India, and Southeast Asia to continue to underpin economic growth for the
foreseeable future.

Korea housing market - Chonsei leases

o Chonsei is a unique Korean lease contract in which the tenant pays an up-
front deposit, typically about 40 to 80% of the value of the property, with
no requirement for periodic rent payments.
o So how does it benefit the developer who is also the landlord? Develop a
residential building on a vacant land parcel value is created, and
translated in capital values what role can chonsei lease play for
developer/ll? It allows developer to unlock capital from their residential
development while retaining an equity stake in the property.
o Support with Korea REMA.
o South Korea has also seen a gradual pick-up in growth, driven by low
interest rates and the governments fiscal efforts, including the latest
KRW10trillion (US$8.5 billion) stimulus package. But doubts remain over
the Korean recoverys sustainability, given fluctuating industrial and
manufacturing output reports over the course of 2016. Labour strike
issues and the impeachment of the countrys president have further
clouded Koreas economic outlook.
o How is the housing market in korea?
o http://www.globalpropertyguide.com/Asia/South-Korea/Price-History
o https://www.globalpropertyguide.com/real-estate-house-prices/S#south-

The China residential market has been hit by cooling measures from the government,
reducing its investment potential. The new policies seek to clear uncleared inventories
in the second- and third-tier cities, while discouraging sales in first-tier and some
second-tier cities. It is predicted that first- and second-tier cities that had exponential
growth in 2016 will see falling sales year-on-year (y-o-y) in 2017. The government
policies come on strong - sales in Shenzhen and Hufei fell m-o-m after local govt
introduced cooling measures.

In January 2017, sales in Shenzhen dropped 23.6 percent y-o-y, while sales in
Huanggang and Anqing third tier cities in Hubei and Anhui provinces grew 122
percent and 87 percent y-o-y, respectively (Sheehan, 2017).

Conclusion: Investing in Chinas residential market is risky at this point of time as more
cooling measures are introduced to control the skyrocketing of housing prices. At the
same time, land parcel bids are not letting up. This means a high capital outlay for
development of residential housing in China but uncertain sales.

Looking forward, Carlby Xie, Senior Director of Colliers Research for China forecasts
that no major policy changes to the governments purchase restrictions are expected in
the near future. The high-end and luxury markets will continue to be active, supported
by the confidence of many home buyers that there is still room for upward growth.

But articles still say first-tier cities yield is high.

Cooling measures done: http://www.colliers.com/en-gb/china/about/media/2017-01-04-

China. 2. Should HBL continue its success in developing residentials in China?

N> see why zhuhai successful. Then see which country is liklely to benefit from the one
belt one road programme. this is the one that we shld invest in
Is China housing market in a bubble?
Mortgage debt to gdp
Big cities have high land demand, but only released small plots pent-up demand.
China has curbed the problem that is the biggest problem behind a crash - homebuyers
over-borrowing. Bcoz they hv almost 50% downpayment and other measures
Despite cooling measures, growth is still undampened.

CHINA REMA (to be blend into other parts of the report).

Amid overcapacity, falling prices and deep losses in infrastructure-heavy sectors such
as steel, China has embarked on ambitious reforms to overhaul the supply side of its
slowing economy.

China - 1. Should we continue to pursue investments in China?

One Belt One Road

What is it?
connecting 65 countries across three continents to China. The initiative seeks to
promote economic co-operation among countries along the land and sea routes.
Countries: https://www.fbicgroup.com/sites/default/files/B

China Is Expected to Achieve High Income Status by 2027

Source: http://www.morganstanley.com/ideas/china-economic-market-transformation-

The latest act in its economic success story may see China achieve high-income status
in 10 years, an unprecedented transformation for a country its size and one with far-
reaching ramifications.
Financial Shock in China - Slower But Higher Quality Growth - Private Consumption to
Keep Rising - High-Tech Consumers
Chinas debt has risen from 147% of GDP in 2007 to 279% in 2016, a buildup that many
fear is unsustainable.

China will be able to avoid the worst yet again, citing three major factors:

Chinas own savings have funded its buildup in debt, which has gone into investment,
rather than consumption;
The government enjoys strong net asset positions both domestically and externally.
Both provide adequate buffers against shocks;
Strong external macro positions, including a current account surplus, high levels of
foreign currency reserves, and lack of significant inflationary pressures, leave China
with plenty of leeway to manage domestic liquidity conditions.
China has borrowed a lot from the future, and the payback will be in the form of a
significant slowdown in growth rates.

China aims to continue its journey toward a high-income society, China will need to
move up the value chain in economic activities, shutting down capacities in old,
redundant industries, while fostering the development of new, high value-added
economic activities in sectors such as healthcare, education and environmental

The future Chinese consumer will be richer, older and more tech-savvy.

RMBs movement
US economic growth and expectations of US interest rate hikes may lead to further
depreciation in yuan, adding to the pressure of forex reserve decline. If the Peoples
Bank of China (Chinas central bank) hikes interest rates to keep a lid on inflation,
companies and individuals will find it harder to borrow money to finance a mortgage.

The team foresees that pressure on yuan depreciation could ease in the second half of
this year as some of policies of the Trump administration might not deliver the intended
results and appreciation of the dollar could slow.