OPINION - Finance Bulls Club

Can China’s Real Estate Crisis Bring Down the Global Economy?

The real estate market in China has been on a roller coaster ride in recent years. After years of explosive growth, prices started to cool in late 2017 and have been falling ever since. This has led to fears that the Chinese real estate market could be headed for a crash – and that this could have serious repercussions for the global economy.

What is China’s real estate crisis?

The Chinese real estate market is closely linked to the country’s construction sector, which is a major driver of economic growth. A sharp slowdown in the real estate market could therefore lead to a sharp slowdown in the economy as a whole. The root cause of the crisis is still disputed, but several factors are thought to have contributed to it. These include the Chinese government’s policies on housing, the country’s economic slowdown, and the rise in housing prices.

The crisis has had a devastating effect on the lives of many people in China. It has also led to a decrease in China’s GDP and an increase in its debt. The Chinese government is working to resolve the crisis, but it is still ongoing.

In addition, the Chinese real estate market is also closely linked to the global economy. A crash in the Chinese real estate market could therefore have serious ripple effects on economies all over the world.

So, what does the future hold for the Chinese real estate market? And can it bring down the global economy?

How could China’s real estate crisis affect the global economy?

China is the world’s largest real estate market, and a slowdown in the Chinese market could have a significant impact on the global economy. This has caused many economists to worry about the potential for a global economic crisis.

If prices continue to fall, it could lead to a sharp decrease in global trade and investment as investors pull their money out of the market. This could cause a ripple effect around the world, leading to a sharp decline in economic activity and a possible recession.

It’s still too early to tell how serious the situation is, but it’s something that analysts are keeping a close eye on. If the Chinese real estate market continues to cool off, it could have major implications for the global economy.

What measures are being taken to prevent or mitigate the crisis?

The Chinese government has taken a number of measures in recent months to try to calm the real estate market. These have included implementing a new policy on home purchases by consumers, lowering the amount of loans that banks are allowed to give, and making it easier for investors to sell their property.

The government has also announced a number of measures to stimulate the economy. These include cutting interest rates on some government debts and increasing spending on infrastructure projects.

What does the future hold for China’s real estate market?

In recent months the Chinese real estate market has continued to slide. In May 2019, prices dropped once again, and were down by an average of 2.3% compared to the previous month.

The government has yet to prevent a slump in the market. This downturn could continue for some time, and could also lead to a sharp increase in unemployment. If the Chinese economy continues to slow, then the real estate market could suffer a serious slump. This would cause a sharp drop in China’s GDP and would have major implications for the rest of the world. We will still have to wait and see the long term effects of this crisis and monitor the situation closely.

Is the world headed for a recession? 6 signs

Global Recession? The world economy is going through rough patches right now. From the fall of the Chinese stock market to the United States’s unexpected move to raise interest rates, businesses around the globe are seeing their profits and sales take a hit. Despite these setbacks, there’s also plenty of reason to be optimistic about the coming months and years as well.

There are several indicators that point to an upcoming economic downturn in the near future, but not necessarily a full-blown recession. If you’re worried about your personal finances in this scenario or know someone else who might be, read on for six clear signs that point towards a recession down the road.

Interest Rates Are Starting To Rise Again

With the Federal Reserve starting to reduce its balance sheet and the U.S. economy looking a bit weaker than expected, the central bank has begun to hike interest rates again. This is a sign that the economy is improving and companies are more confident. But while the Fed is hiking rates, they’re also continuing to reduce the size of their balance sheet.

This mix of tightening and more rate hikes is a good sign that the economy is getting back on track. But it’s also a sign that the Fed is getting ready to reduce their balance sheet and bring rates down again. If interest rates keep rising in a steady but noticeable way, you should be more optimistic about the economy’s future.

Unemployment Is On The Upswing

The Fed is hiking rates and reducing the size of their balance sheet and the U.S. economy is looking a bit stronger. But all of this comes with one big downside: unemployment is rising. In fact, the Department of Labor reported that unemployment rose to 4.6 percent in the most recent month, putting it at its highest level since August of 2008.

This isn’t necessarily a bad thing either. After all, higher unemployment often means that more people have jobs and are earning more money than they were before. If you’re looking for a sign that the economy is improving, this is a good one.

Stock Markets Are Falling Again

After rising for years, the stock market is now starting to fall. This is a sign that investors are growing nervous about the future and trying to protect their wealth. It also usually happens when confidence in the economy is waning. And in the United States, it all comes with a side note: economic growth.

Stock markets are falling because the government recently announced that the economy is growing at a measly rate of just 1.4 percent. This is a sign that the economy is slowing down and investors are worried about the future.

There’s A Tightening Credit Market

While stocks are falling and unemployment is rising, one good sign is that credit markets are becoming a little tighter. This is because when people put money up as collateral to get loans, they’re not getting as high of a rate of return. And when credit is easy to come by, it means that people are borrowing more money.

The combination of falling stock markets and rising unemployment is a sign that credit markets are becoming more difficult to borrow money in. This is a sign that the economy is slowing down, but it’s not a bad thing.

Consumer Confidence Drops

When interest rates are rising again and the stock market is falling, it’s not hard to predict that consumer confidence is going to drop as well. Consumer confidence is a good indicator of how consumers feel about their finances and their future.

When confidence falls, consumers might start to pull back on spending, which can have a domino effect on the economy. Consumer confidence is a good sign because even when the economy is struggling, people still want to buy things. But when confidence drops, consumers might start to think twice about spending money.

Weird Things Start Happening In The Economies Of Key Nations
This one is a little more subtle. When consumer confidence drops, people start to pull back on spending. But when they do so, they also start to be a little more careful where they spend their money.

This is a good thing, but it can also mean that certain industries are going to suffer a bit more than others. For example, when consumer confidence declines, people start to be a bit more cautious about spending money on vacations. This means that travel companies see a bit less sales than usual.

Conclusion

A recession isn’t necessarily a bad thing and is an inevitable part of a healthy economy. Still it helps a lot to be prepared to go through it smoothly and come out on the other side with no major financial hit to you or your business.

What will be the future of Bitcoin?

Satoshi Nakamoto, a name that is equally famous and infamous at the same time. It was starting of the year 2009 when he published a white paper and officially released BITCOIN. Although it was not the first cryptocurrency unlike eCash (developed by Digicash), this was the one which brought on the fintech revolution across the world.

The very next year, in 2010, he handed over the project to the community by making it open source.

Since then it has seen highs and lows but maintained to survive in the market to retain the title of “Oldest Surviving Currency”.

But the concern is, until when? When will it fall? What would be its future? To find all these answers, let’s dig in.

What development has Bitcoin made?

In his 9-page white paper, Nakamoto started with the title “Bitcoin: A Peer-to-Peer Electronic Cash System”. The heading itself says a lot about the purpose behind its development. As an organisation, it has innovated as-

Control against fraud

In 2022, cryptocurrency worth 2 Billion USD has already been stolen by hackers. BTC also have a good share of loss in the same. Hence the company focus on a high level of security to protect its user from frauds like chargebacks. It also provides hardware wallet support which makes it even more difficult to steal or lose.

Cost Efficiency

The direct contact between the sender and receiver eliminates the middlemen’s time and cost which makes it more cost-efficient to trade with. It looks forward to reducing poverty by cutting the transaction charge on workers’ salaries.

Multi-signature accounts

Multi-signature allows a transaction to be accepted by the network only if a certain number of a defined group of persons agree to sign the transaction. This has enhanced the functionality of BTC and expanded its reach further to firms where payment is approved by a board of members.

Bitcoin Roadmap

The company witnessed a great journey in its history of 13 years.

The Whitepaper – Oct 2008

Satoshi Nakamoto published the Bitcoin Whitepaper.

Genesis Block – Jan 2009

The genesis block(Block 0) is the first block upon which the rest of the blocks are added. In Jan 2009, the genesis block of Bitcoin was mined

M-of-N Standard Transaction- Oct 2011

Bitcoin Improvement Proposal numbered 011 (BIP 011) facilitates secured wallets, escrow transactions, and multiple signature payment use cases.

Pay to Script Hash- Jan 2012

BIP 016 implemented a new standard for the BTC scripting system and added new rules that were applicable only to new transactions

Hierarchical Deterministic Wallets- Feb 2012

BIP 032 introduced HD Wallets which allow for multiple cryptocurrency wallets to be generated from a single seed phrase.

A Finite Supply for Bitcoin- April 2014

BIP 042 introduced a finite supply of Bitcoin after identifying the bug that would result in an infinite volume of bitcoin.

SegWit- Aug 2017

BIP 148 proposed a transaction format where the witness information would be removed from the input field of the block.

Taproot- Jan 2020

BIP 341 is considered the most revolutionary BIP to date and we will know why in the next section.

Bitcoin Upgrades

As the market is growing, there is a growth in competition every day. To sustain the competition like all the other cryptocurrencies, bitcoin too has regular upgrades. Upgrades are a way of enforcing new features in any cryptocurrency protocol. The most recent upgrade from bitcoin is Taproot Upgrade.

Taproot Upgrade

Earlier, the verification of bitcoin transactions was comparatively slow as each digital signature was validated against a public key. The time was directly proportional to the number of inputs and signatures in the case of multi-signature transactions.

To resolve this problem, the Taproot upgrade allows multiple signatures and transactions to be batched together. This reduced the latency drastically and became a revolutionary bitcoin upgrade. A team of Pieter Wuille, Jonas Nick, Tim Ruffing and Anthony Towns developed the Taproot.

Now talking about the relationship between the market and bitcoin, it has been a roller coaster ride and for the same reason, famous market enthusiasts fear its end be soon.

Is fluctuating market would result in the end of Bitcoin?

Chakib Bouda(CTO, Rambus- a payment firm) said, “We expect in 10 years time, bitcoin will become mainstream and have a remarkably different reputation. ”

There is a clear division among crypto enthusiasts on the future of bitcoin due to the fluctuation seen in the previous 2 years. However, the arguments in favour of the survival of bitcoin sound more reasonable.

Since the launch of bitcoin in 2009, it has been almost a decade. In just one decade, cryptocurrency has gained a market of 2.02 Trillion USD, greater than the economy of many countries and the credit of the revolution still goes to bitcoin. It is predicted that the market would gain a worth of almost 5 Trillion USD by 2030. Imagining such a huge market without Bitcoin is unfair and quite far from reality.
Seeing the potential in the market many big firms already have invested in bitcoin even after the collapse. Paypal has brought crypto custodian Curv, whereas, on the other hand, Tesla bought bitcoin worth 1.5 Billion USD.

Expected Future of Bitcoin

Bitcoin is the most headline-seeking cryptocurrency of all time whether it comes to its illicit use, its controversial rise, its uncertain future and its power to collapse and lift the market.

But the following are some predictions made by various statistical agencies over the future of Bitcoin:

On reading the trendlines of waves of Bitcoin prices, it is predicted to cross the mark of 1 million USD per bitcoin by the end of 2030.
Looking at the 295 Million cryptocurrency users in 2022, the prediction is being made for 1 Billion crypto users by 2030. If we consider the market share of Bitcoin users, there would be more than 300-400 Million users of Bitcoin by 2030.
In 2022, 2.5 lac bitcoin transactions are performed daily which will scale to more than 10 lac transactions per day by 2030.

According to my opinion made after studying the view of many economists, industrialists, tech enthusiasts and statisticians, I believe:

Very soon it would be centralised.
It has a dazzling future with huge profit margins for its holders.
Mass-market will embrace crypto payments like UPIs today
Countries across the world would approve Bitcoin as a legal tender.
It would be one of the most technically developed, efficient, fast and secure cryptocurrencies of all time.

Is it a good time to buy Bank stocks?

In comparison to the benchmark index, the banking and finance sector has recently started performing well However, some industry experts feel that the financial and banking sector presently presents investors with a favorable investment opportunity due to the sluggish recovery in loan growth and improving asset quality.

The massive deleveraging of India Inc., according to experts, has caused the poor asset cycle for banks to be clearly in reverse during the last 5 years. Banks are now adequately capitalized, and the prognosis for asset quality is positive.

Loan growth is probably going to gain steam as the private CAPEX cycle is anticipated to start up toward the conclusion of this fiscal. In comparison to their historical average, the market values of the businesses in this industry also appear to be favorable.

Investing in sectoral funds for the financial and banking services industry is one approach to gaining exposure to the market.

Why are Bank Shares Growing Fast?

The banking system in India has seen significant upheaval during the last four years.

An economic rebound has been sparked by the post-Covid phase, first. Due to this, both individual and business borrowers are now more in need of loans.
Second, because businesses have opted to maintain their current level of austerity over the previous few years, corporate debt levels overall have fallen dramatically.
Third, the firming of interest rates has begun. As a result, increased Treasury income is anticipated.
The fourth point is that gross non-performing assets (NPAs) have reached five-year lows. Therefore, the NPA provisions on the books of financial institutions will be smaller.
Fifth, the banking industry has been greatly disrupted by the positive effects of digitalization and financial inclusion, particularly in terms of payments and loans.

There are rarely so many good things happening at once in any one industry.

Sectoral Funds Investment

A minimum of 80% of the sectoral funds’ investments are made in businesses within that sector. Before you choose to place a wager on the finance and banking industry and invest in a fund in this sector, the overlap between your investment and the remainder of the portfolio should be taken into account. Stock mutual funds usually allocate a sizeable portion of their portfolios to the BFSI sector because it makes up the largest portion of the benchmark equity indices.

A strategic allocation to the sector is required because the majority of funds have a very significant weighting towards equities in the banking and financial services industry.

Plan Carefully

Investors attempting to invest in sectoral funds must nevertheless carefully plan their entry and exit points to prevent any hiccups. If the entrance and exit are not carefully thought out, one might have to absorb losses and wait a very long time for a rebound before making the best returns. Stay away from sectoral funds if you believe you cannot time the departure of the investments well and cannot handle the instability that comes with them. Even in that case, spreading out purchases of these funds will be preferable to make a single large commitment.

How to Choose which Bank Shares to Buy Now?

It is more difficult to do than it is to say which stocks to buy in the banking or financial sectors. But by doing some research you will be able to choose the right one.

It is simple to see the benefits of cyclical industries like banking. But the dangers are typically disregarded.
In the years following Covid, banks restructured loans totalling billions of rupees. It only takes a short while until new slippages start to show up, even though the books may appear to be reasonably clean right now.
When interest rates are lowering, loan renewals are frequently done. The genuine quality of loan books will be put to the test whenever interest rates increase.
Despite being at 5-year lows, the NPA levels are still a significant 6 percent of the total loan book, which is important to note.
For the time being, increased lending rates have given banks a larger profit margin. Deposit rates have not yet caught up to rising lending rates. Therefore, for a few quarters, banks will appear robust due to increased net interest margins.
But keep in mind that they must maintain their capital adequacy ratios (CAR). As a result, banks will also need to raise capital to cover increased loan demand. As a result, rising deposit rates will eventually cause those added margins to disappear.

Best Banking Shares to buy in 2022?

Here are some banking shares I think is worth buying now:

SBI
AXIS
HDFC
ICICI

Why selling SBI share could be a Good decision Now?

SBI (State Bank of India) is a government-owned bank that was established in 1955. India’s State Bank is ranked 43rd in the world and first in the country. Mumbai, Maharashtra is the headquarters of the SBI. Across India, SBI has 22140 branches and 60000 ATMs. In 1994, the stock of SBI was valued at 18 rupees. The share price began at 18 rupees in 1994 and rose to a price of 450 rupees in 2022.

SBI Share Price History

As you can see in the graph above, it climbed significantly in 2014 and by a large margin in 2015. The SBI shares reached a high of almost 300 rupees. That would have been an ideal time to sell your stock at that point. In the next year, it plummeted dramatically. It dropped by nearly half, from 300 to 150. For investors, it was a jarring period. Then, in 2017, it began to rise again, continuing on an upward trajectory. It reached a high of 350 rupees at the end of 2017, but then plummeted below 250 rupees in 2018. It crossed the 350-rupee level in 2019 and remained stable for a time. However, in 2020, the pandemic began, causing the market to plummet, and SBI’s stock fell below 150 rupees once more. It was a particularly difficult time for investors. SBI’s stock began to gather traction in 2021, and it continued to increase until 2022, when it reached an all-time high of 550 rupees. If you look at the statistics in the past, you can see that it is on an upward trend. However, there is a potential that it will fall again. And you never know how much of a fall it might take. So, to be on the safe side, you should sell your SBI shares right now.

When the company released its March quarter earnings on May 13, the share price of State Bank of India plummeted in early trade on May 16th. SBI’s net profit increased by 41% year over year to Rs 9,113.5 crore, falling short of the Street’s forecast of Rs 9,927.6 crore. The company’s net profit was the greatest it had ever been, but shares fell a little more than 1% as a result of the news. The rise in profit was fueled by a 15.3 percent gain in net interest income, which stood at the price of Rs 31,198 crore, somewhat below analysts’ projections of Rs 31,570 crore. Non-interest income fell 27% year over year, disappointing investors. However, it increased by 37 percent year over year, while net interest income increased by only 1.6 percent.

However, Dalal Street analysts predicted that the company would recover due to its expanding market share and tremendous development potential. According to analysts, SBI’s stock price will gain from its extensive network, lower customer acquisition costs, higher asset-quality clients, and greater cross-sell prospects.

In the previous two years, the share price of SBI, or State Bank of India, has been on a roller coaster. At the end of the 14th of June, SBI’s stock closed at 448 rupees. With 0.48 percent, we can see that it is now on an upward trend. When it comes to price predictions, it is predicted to hit a high of 750 rupees and a low of 546 rupees in 2022.

What was the price of SBI stock in 1995?

In 1995, SBI’s stock was trading at 21 rupees per share.

In 2025, how much will SBI’s stock be worth?

SBI’s share price is expected to reach 966 rupees in 2025.

What will SBI’s stock price be in 2030?

SBI shares are expected to reach a target price of 1933 rupees by 2030.

So Is it a good idea to invest in SBI stock?

SBI shares have maintained their Buy rating, and the brokerage has selected it as its top investment selection for the month. The company is still considered one of the best investments. Asset quality and loan expansion contributed to the outstanding result.

Because 74 percent of loans are floating rate, there is room to increase profits. To meet loan expansion, the balance sheet is robust and the capital adequacy ratio is acceptable.

As previously said, it is recommended that you sell your SBI shares now and then buy them again at a lower price when they fall again. Make your own research, examine historical tendencies, and then make your decision.

Disclaimer: This is not an investment advise. Please DYOR before buying or selling SBI or any other stocks.