XIN found its ground around $3.00 per share. If the first round of quick price appreciation is a little confusing with huge volume, this round of new price appreciation with much normal volume indicates the new trend will be much more sustainable.
Numerous bank branches in each Chinese region already started to offer discount to first time home buyer in China this year. Official seems to be OK with it without any objection from the banking regulator. This is the typical Chinese way of saying "we want to relax the property restrict policy." I guess the official is worried about the hard landing possibility, so it will tolerate moderate real estate growth as long as price will not appreciate too much. XIN will win this golden time. Now, the situation is little similar to the early 2009.
I don't understand why everyone has so quickly concluded that there's a new floor price at $3 for XIN.
Last week, folks seemed perfectly willing to attribute XIN's declines to overall market or overall China stock performance, despite the fact that XIN was still grossly underperforming other China stocks.
Now, after two days of China stock wide rallying, with XIN performing in the top quarter of China stocks over two days, but not outperforming the entire sector to the upside the way it just did to the downside, any connection whatsoever between China stock performance and XIN performance appears to have been forgotten (or more likely, ignored).
Do people really believe there's a causal connection between China stocks, only to the downside, and no connection whatsoever to the upside?
[As I write this, XIN is up 7%, as are RENN and TUDO, with YOKU, SINA and CNTF up 5%, and virtually every other China stock I track up at least 3%]
Nobody guarantees XIN will never drop below $3 again. The fact is the Chinese real estate sector has led the recent Chinese stock rally. The industry fundamentally changes to a positive note compared with the last two years. I said many times. What really determines XIN's long-term price appreciation potential is the industry trend. Now, it is in XIN's favor.