Page 347 - 2019 6th AFIS & ASMMA

» Moderator | Henny Sender with Simon. Now what the government tries to do, as they are very
Back to you Jerry, a question from me and a question from the subtle, maybe some of you are also familiar with Chinese culture, is to
audience. You know both developed countries and emerging markets have a pilot project, as they tend to do so when they are not familiar
have problems with something that you've both referred to, including with the subject. For the property price tool, they are so subtle that
titles. And I lived in Japan during the housing crisis, I don't know if they have the initiative called, “One city, One policy”. The overarching
Kobayashi-san is still here from Japan Housing Finance, but one of is determined by the top, by the central bank, PBOC. But when the
the issues was that titles were not clear in Japan. So, for you, how clear banking regulator, the central bank decides, for instance, the LTV cannot
is the data about titles and property rights in China? And a question go over 80 percent, each city needs to decide for the first loan of which
from the audience is, are house prices in China sustainable? What are the LTV cannot go beyond 60 percent. And for the second loan, it has
the implications of this for the development of the Chinese mortgage to be cash purchase. It varies city by city. So, they have this subtle way
market? to overcome the property, the pricing issue, but again it's an issue varies Session II
from places to place. This has drawn lots of people's attention.

» Panelist | Jerry Fang
Okay, thanks. So, I think the first question is more related with laws, » Moderator | Henny Sender
the legal infrastructure. Although it's still a communist market, they Thank you. Before I'm going to ask you a question from the floor, I'm
learned a lot from other markets. So in terms of the property rights, the going to turn to this side and ask you both on the regulatory policies,
contract laws are similar to those of other countries. Of course, it's a incentives tax policies, all of which matters greatly. Can you tell us which
massive market, sizable territory, so in terms of mortgage registration, it countries can be role models giving the right incentives for affordable
takes time. But other than that, I think from a rating agent's perspective, housing, without causing bubbles? And can you also tell us about
the enforceability, the foreclosure process, though it takes a bit longer international regulation, regulation like BIS that applies across countries?
time than other developed markets, in terms of the title, the right, we Whenever I chair infrastructure panels, people always point out to me
don't see particular, material differences from the other markets. Also, that under Basel III, infrastructure is kind of toxic, right? I'll ask you
when we rate a transaction, we have a lengthy on-site meeting with the both to answer that, then I'm going to turn to you for the question from
originator. So, we do not just look at the numbers, but also ask their the audience.
practices. Given the feedback from the transaction legal counsel or our
observation on the data and our interviews with the local originator,
there's no particular issue that's different from other markets, in terms of » Panelist | Simon Walley
title transfer or other legal issues. Okay, I’ll talk about incentives, and maybe a bit about subsidies. In
our experiences, the subsidies, if done badly, can destroy markets, and
The second one is about the property price trend. Obviously this is even destroy governments. The classic example is probably Hungary,
a very important issue, not just to all of us. The Chinese government is which saw rapid growth particularly as it was embarking on its journey
very focused on this as well. They understand the speculation, the asset Post-Soviet era, and subsidized every aspect of the housing market;
bubble, which could create unnecessary or excessive lending, also hurts whether it's developers, capital markets' products, or the mortgages,
the affordability, and this will eventually lead to social unrest and affect every interest group had a subsidy. It mushrooms and balloons, and it
their political authority. That echoes to the previous topic you discussed kind of ran out of control, almost to the extent that the government was

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