Another article to show that the end game will not be nice. Many have forgotten the bear market prior to this climb that lasted for 3 years.
Updated: 2007-01-26 16:54
A man surnamed Li pawned his 200-square-meter apartment worth over 1 million yuan (US$129,000) near Beijing Capital Airport for 800,000 yuan so he could invest in the stock market. He then pawned his stocks for 700,000 yuan and bought more stocks.
High-risk investment or reckless gamble? Either way, this strategy is becoming increasingly popular among the Chinese capital’s speculators.
“Our client, Mr Li, had initially bought the apartment for property investment but, without a suitable buyer, he turned to stock investment,” said Yang Jingkun, assistant manager of Beijing Huaxia Pawnshop.
“Every month around 10 stock investors mortgage their apartments for 600,000 yuan to 700,000 yuan in our pawnshop,” said Yan Xingnong, general manager of Minsheng Pawnbroking Co, in Beijing.
“One of them pawned three luxury apartments for a total of three million yuan,” Yan said.
Beijingers pawned their apartments for a total of 1.5 billion yuan last year and most of the money was poured into the stock market, according to China Securities Journal.
Considering the size of the returns, the risk appears huge. Pawnshops in Beijing offer loans worth 70 percent of the value of an apartment and charge a monthly interest rate of 3.2 percent. If an investor pawns an apartment worth one million yuan and his stocks yield a 50-percent profit, then he or she will still only earn 81,200 yuan a year.