Home sales appear to have stabilised, suggesting that some buyers are returning to the market. The recovery may be derailed, however, by the continued strength in home prices, which could lead to further tightening measures being introduced.
China’s freight volumes slowed down slightly in the first three weeks of May according to China Confidential’s survey of 201 railway, road and air logistics companies across the country.
Local commentators debate the meaning of the surge in land sales.
Chinese real estate developers are increasing their involvement in overseas markets.
In line with a broader acceleration of reform plans, signs are emerging that the government is taking more concrete steps to tackle pollution. As the government ramps up its campaign several companies involved with air pollution reduction have seen their share price rise (Renminbi Compass May 15, Spotlight). We believe that steel prices could also benefit from these developments, as the sector is a good candidate for stricter emission standards and the closing of out-dated capacity. Previous obstacles to reform - the fact that construction steel manufactured by backward, heavily polluting mills was in short supply and that vast swathes of the industry were unregulated - have diminished, potentially paving the way for a clampdown on the worse polluters.
Home sales remain weak but the pace of decline has moderated, while April data from the National Bureau of Statistics (NBS) suggests that developers are ramping up construction activity in expectation of improved demand going forward.
DANWEI – Additional travel over the May 1 holiday did not result in increased rates of reported bird flu H7N9 infections, but stories about quality problems with consumer brands circulated in the Chinese media. A study by a Chinese university this week found that six brands of whitening toothpaste contained 'carcinogenic sulfites'. The China Oral Health Products Industry Association cast some doubt on the methodology of the study, but the news caused a spike in social media conversations in China on the six brands.
Home sales remain weak at the start of May, while listed developers’ April results confirm the fall in transactions last month. Our proprietary survey of real estate developers suggests that slower growth is due to weaker demand from first-time buyers (Real Estate Macro Indicator, April 30). Underlying demand in this segment of the market remains strong and we believe that these fundamentals will reassert themselves once concerns over tightening measures die down.
Home sales slowed in April, led by a sharp fall in first-tier cities. Continued home price growth in these areas, however, raises the risk of further tightening measures being introduced.
Plunging steel prices in what is historically a period of peak demand for the industry has raised questions about the strength of China’s economic recovery.
Renminbi Compass reflects key changes in the renminbi-denominated investment environment.
Providing research coverage on asset classes as diverse as chengtou bonds, dim sum bonds, real estate, trust products, underground banking, art and antiques, as well as its traditional equity fund research.
Renminbi Compass provides orientation for investors navigating the expanding universe of renminbi asset classes.