Liverpool supporters do not know whether to be delighted or dismayed about the possibility of Anfield passing from American into Chinese ownership.

Some fear that it would make the team too reliant on the left wing. Others argue that a huge influx of new supporters would overwhelm the 45,000 capacity stadium. On the positive side, it should improve the volume discount on replica shirts.

For China, the football firm would probably be a more reliable investment than some of the property loans made by the nation’s banks. Stress tests ordered in May by the China Banking Regulatory Commission (CBRC) had to include the impact of a 30% decline in real estate values.

Some lenders apparently went a step further, examining what would happen if prices fell by 60%. It might well have been prudent risk management but it was a psychological blunder. When it emerged this week that the banks might be factoring in what could only be described as a property collapse investors sold shares in banks and real estate firms.

The regulator attempted to reassure the market, telling investors to get real. It said in a written statement; ‘Testing all types of circumstances does not represent the CBRC’s judgment about a tendency in the real estate market and does not represent a possible change in policy toward real estate credit.’ What the Chinese experience does reinforce is the decision of the Committee of European Banking Supervisors (CEBS) not to include the possibility of a sovereign default in its own stress tests.

Unfortunately, however, it also underlines the inherent weakness of stress tests: if they are tough enough to be truly stressful they run the risk of creating that very stress. Markets are more to do with psychology than logic.

Spread Betting on House Prices

If you are looking closer to home note that you can spread bet on UK House Prices

• For an example see Spread Betting on the Housing Market
• You can spread bet on UK house prices with IG Index

Currency Trading and Spread Betting carry a high level of risk to your capital and you can lose more than your initial investment, they may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.

Article by Moneycorp

The above content does not constitute investment advice. Neither Online-Spread-Betting.com nor Moneycorp accepts any responsibility for any use that may be made of the above.