We have been reporting Prem Watsa’s Fairfax Financial annual meeting for shareholders. Readers can find some prior coverage here, . Below are the slides from Watsa, including some his ‘famous comments’ about China’s ‘massive real estate bubble’, and his chart about the social media bubble.
Monstrous Real Estate & Construction Bubble in China
- China built 50 Manhattans between 2008 and 2012
- China built 20 million housing units in 2012 compared to 2 million in the United States at its peak
- At the end of 2013 China had 60 million units under construction
- In many Chinese cities, the existing housing stock has been replicated and is empty
- Home ownership rates in China are estimated to be over 100% versus 65% in the United States
- Since 2009 the Chinese banks have grown by the equivalent of the entire United States banking system
- The shadow banking system in China is estimated by BoA to be $4.7 trillion or 51% of Chinese GDP
- Prior to the credit crisis, the U.S. had $4.5 trillion in asset-backed securities (31% of U.S. GDP)
- A combination of explosive growth and high interest rates has resulted in a massive carry trade where speculators borrow at low rates across the world and invest in China – when the capital flows reverse, watch out!
Full presentation below
2014 AGM Final Slides PDF for download