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00:00CHINA, SKY HIGH PRICES. THEY COULD PRESENT THE LATEST CHALLENGE TO THE YUAN. HOW DOES THAT STORY TIED TOGETHER? LET'S TALK ABOUT THIS. BUBBLES, NOW WE ARE GOING TO TALK ABOUT A HOUSING BUBBLE AND THE SPILLOVER EFFECT, NOT TO THE BANKS, BUT TO THE CURRENCY. TALK ME THROUGH IT. >> GOOD MORNING, MANUS. WE HAVE SEEN A GAIN IN CHINESE HOUSING PRICES. THE THING ABOUT U.S. HOUSE PRICES, THEY REPRESENT 5%. PEOPLE HAVE STARTED TO PUSH INTO THE U.S. HOUSING MARKET AND OTHER MARKETS AROUND THE WORLD. IN THAT SCENARIO, WHERE INVESTORS ARE CHASING THE DIFFERENTIAL, IT WOULD PUT DOWNWARD PRESSURE ON THE CURRENCY. THE THINKING IS, POLICYMAKERS WOULD PROBABLY LET THE CURRENCY BE SACRIFICED. THE DOMESTIC PROPERTY MARKET IS MUCH MORE IMPORTANT TO THE ECONOMY. THEY THINK THEY CAN GET BETTER BARGAINS ELSEWHERE AND PUT DOWNWARD PRESSURE ON THE YUAN. MANUS: THE IRONY IS NOT LOST ON ANYBODY. FORGIVE ME, I HAVE HAD SEVEN DAYS AWAY. HERE WE ARE ON THE WAY IN. WE HAD A LOT OF ENCOURAGEMENT FROM THE BANKS. HERE WE ARE. ARE WE GOING TO SEE CURBS ARE ON THE WAY, OR POLICY HALTING THE SALE OF ASSETS? >> IT IS A TRICKY ONE BECAUSE THIS IS A BIT LIKE THE STOCK MARKET LAST YEAR AND THERE HAS BEEN A LOT OF POLICY ACTION BEHIND THE HOUSE PRICE GAINS. AS WE KNOW, REAL ESTATE STRUCTURE IS A HUGE MODIFIER. IT IS IMPORTANT IN EVERY ECONOMY, NOT JUST CHINA. THEY WANTED TO SEE PRICES GOING UP, BUT THEY MIGHT HAVE GONE TII OO FAR. WE WANT TO SEE MORE CURBS. WE DO NOT WANT TO SEE ANY PANIC BUYING. CURBS THAT DON'T CHOKE OFF THE

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China's Property Boom Threatens Yuan

China's sky-high house prices may present the latest challenge to the yuan. Bloomberg's Enda Curran reports on "Bloomberg Markets Middle East." (Source: Bloomberg)

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