Chinaâs stress tests of banks will assess the risk that a possible slump in property prices may strain developersâ finances and cause homebuyers to default, a person with knowledge of the matter said. The banking regulator told lenders to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively, the person said, declining to be identified because the regulatorâs requirement hasnât been publicly announced. Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent. http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ab.zb2lBFicI This should be music to Jim Chanos ears...
Please. The Chinese simply saw that stress tests in America and Europe caused major rallies in the equity markets, and they want some while the gettin's good. I predict that stress tests will become an annual event.