23 July 2018 FT — Articles to Read

23 July 2018


Question: According to MoneyTalksNews, what are 7 great reasons not to move after you retire?


China’s 25-year housing boom set for downturn – Pg. 3

          Housing sales in China will peak this year and then begin a long-term decline, an inflection point that will drag on growth in the construction-heavy economy and hit global commodity demand…..

          China’s economy has reduced its dependence on property in recent years, but construction remains a crucial growth pillar, employing 27m workers and fueling demand for steel, copper and cement.  Growth of housing sales has also been remarkably consistent, with only two annual declines since data began in 1992

          Housing sales totaled 1.4bn sm in 2017, an annual increase of 5%

          …housing sales peaked last year and expects a 2.2% decline this year, after a 3% rise in the first half

          …urban home ownership rate of 89% by 2014, …China’s housing sales have been driven by urbanization of rural residents and demand from existing urbanites for better homes

          Millions of homes bought as investment also lie empty….29% of Chinese urban households owned at least one vacant property in the second quarter this year

          Local governments have relied on land sales to property developers for fiscal revenue, but most prime land near urban centres is now largely developed – including slum areas that were demolished and redeveloped.  This shift has increased local government support for taxing property buildings


Investing – Pg. 7

          …”Factor investing”, which in theory breaks down market returns into their basic components, researching what drives them and trying to systematically exploit their characteristics

          Factor investing is part of a broader world of computer-powered “quantitative” finance

          Financial academics argue that a lot of what asset managers do is take advantage of these well-known patterns, anomalies and inefficiencies.  But if one can do so systematically and cheaply, why pay for an expensive fund manager?

          Think of factors as the basic ingredients of a solid meal.  By deconstructing and finding the healthiest components, fans say they can reassembled into a better-balanced, tastier diet.  In other words, a more diversified, robust and cheaper investment portfolio than one built with traditional, blunt asset classes like stocks and bonds

          In 1992 Eugene Fama and Kenneth French, two professors at the University of Chicago Booth School of Business, published a paper that showed how investors could beat the stock market’s returns – the “beta” in finance jargon – by taking advantage of two simple factors: the tendency of small or cheap companies to outperform over time

          Factors are often called risk premia because they represent the extra compensation investors receive for taking on some specific risk

          …Prof Fama is the father of the “efficient market hypothesis”, which argues that investors cannot consistently beat the market


US lenders warn on rising trade fears – Pg. 14

          Overall business lending in the US has picked up after a protracted stagnation.  Industry-wide Federal Reserve data show it accelerated from a seasonally adjusted rate of 2.9% in the first quarter to 7.7% in the second


Answer: (1) It’s cheaper to stay put; (2) You’ll be closer to family and friends; (3) Your current doctors know you well; (4) You won’t have to face the unexpected alone; (5) You might pay less in taxes; (6) You’ll keep your network intact; (7) There is no place like home sweet home