Management Views

China’s Real Estate Crisis | Wassim Jomaa in an Interview with Bloomberg Asharq

China’s Real Estate Crisis | Wassim Jomaa in an Interview with Bloomberg Asharq

In an interview with Bloomberg Asharq, Wassim Jomaa, Chief Investment Officer at The Family Office, discussed the real estate crisis in China and concerns that it might turn into a global financial crisis. Below are the highlights of the interview:

Oct 1, 2023Management Insights- 1 min
  • At The Family Office, we prioritize caution, diversification, and capital preservation. We hedge against certain indicators such as rising interest rates or bond yields amid increasing debt levels worldwide.

  • We have witnessed on a global level a lack of coordination in monetary policies among central banks, leading to volatility and causing concerns.

  • The gradual increase in interest rates from 0% to 5% or more has revealed the accumulated problems over the past 10 or 15 years. Consequently, we are facing a new environment for the cost of capital, where interest rates are high amid rising inflation compared to the past 15 years. We should therefore expect increased volatility and further challenges.

  • There are some concerns arising from the real estate crisis in China regarding the potential transmission of stress from property developers to suppliers, as well as the possibility of this stress spreading to the banking sector. However, it is worth noting that this crisis began three years ago and is not therefore new.

  • To mitigate the repercussions of the bursting of this crisis bubble and its spillover abroad, central banks should reverse their policies and inject liquidity from the beginning while reducing interest rates.

  • The countries of the world are not heavily exposed to China due to the departure of many international portfolio managers from the country in the past two years.

Watch the full interview above.

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About The Family Office

Since 2004, The Family Office has been the wealth manager of choice for more than 500 ultra-high-net worth families and individuals, helping them preserve and grow their wealth through customized solutions in diversified alternatives and more. Schedule a call with our financial experts and learn more about our wealth management process.

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