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By "privatising" so much over the past few years it created many more opportunities for the small investor. Putting those opportunities in front of a population with an inclination towards gambling and no recent history of how a capital market works got a lot of people involved that perhaps should not be. I've been in and out of that market a few times but getting solid information can be difficult. Most mature markets have a ton of regulations covering financial transactions. China, like the old Soviet Union, is just learning to build the required regulations.
As to people taking out mortgages to "play" the market, try and get your head around just how easy it is to get multiple mortgages on the same property with none of the lenders being able to reliably find out about the other mortgages or in some places really nail down who actually has title to the property. There is also a well developed “secondary” economy that performed many of the services not officially available prior to the recent changes.
They’re just figuring out some of the pitfalls but they’ll straighten out what they need to.
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