This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

China Housing ETFs in Dicey Position

NEW YORK ( TheStreet) -- Earlier this year, things appeared to be looking up for Chinese real estate developers who have endured regulatory pressures in recent years from the bubble-fearing Beijing government.

At the start of February, the sector breathed a sigh of relief following reports that the nation's central bank had pledged its support for first time homebuyers looking to secure a loan. A number of municipalities, fearing that negative economic fallout would result from a steep housing downturn, have also stepped into the ring, hoping to convince the central government to back away from its restrictive stance.

Evidence of the improving mood surrounding China's housing market could be seen across real estate-heavy products like the iShares MSCI Hong Kong Index Fund (EWH) and the Guggenheim China Real Estate ETF (TAO). The two funds witnessed steep run-ups during the opening months of the year, with the latter closing out February at its highest levels since early August.

The recent rally has been encouraging. However, this is not an investment opportunity I would encourage investors to take advantage of at this time. As we have learned more about the housing-related showdown taking place between the various layers of government in China, we are beginning to see signs that a potential policy reversal may just be a pipe dream at this time.

When the Chinese government took introductory steps to rein in the nation's housing market the effects were largely non-existent. However, in recent months, the impact of these restraints has begun to take effect.

In February, the Chinese Bureau of Statistics found that residential real estate prices declined not only from December to January, but also on a year-over-year basis. Lawmakers are ready to intervene in order to prevent a healthy downturn from transforming into an all-out crash. However, this has not stopped some from expressing their doubts that a prolonged, uncontrollable tumble could propel China into a concerning period of economic slowing.

At this time, however, Beijing is shown little willingness to budge from its tightening stance. At the start of the week, Xinhua reported that the government had reiterated its commitment to keeping housing prices low. Indeed one official warned that increasingly harsh regulations could be imposed on the local governments that are acting against the policies.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
EWH $20.42 0.00%
FXI $37.97 0.00%
TAO $20.92 0.00%
AAPL $118.03 0.00%
FB $105.41 0.00%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs