Morning Market Brief: June 18, 2024

China’s property market disappoints?

Investments in China’s property market declined by the second-largest amount historically in the period from January to May 2024. Authorities have said that policy support packages need more time to filter through into the economy. The People’s Bank of China kept interest rates unchanged yesterday for the tenth month in a row.?

• New home prices in China fell by the most in 10 years. According to the National Bureau of Statistics, home prices fell by 0.71% in May on a monthly basis and by 3.9% annually. The value of existing homes was down by 1% in May month-over-month.
• Home prices have declined for 11 months in a row. Prices declined in 68 out of 70 cities that were included in the survey.
• Officials announced policy support measures in May, including lower down payments. These measures are intended to make the process easier and more accessible for homebuyers, but industry experts suggest that even more measures could be needed.
• The housing market balance is affected by oversupply. The excess supply of housing is resulting in lower house prices and investment demand.
• Other data showed industrial production growth slowed. Manufacturing output slowed. Conversely, mining output accelerated. Concerns about demand from China can be a concern for the global oil market.
• Retail sales picked up. Sales grew by 3.7% in May on an annual basis compared to a 2.3% increase in April. Still, sales have been restrained on a historical basis, and the government has tried to offer spending incentives for companies that upgrade equipment.

China’s industrial output expanded by 5.6% year-over-year, which was less than expected. On the other hand, retail sales beat expectations but haven’t returned to the levels experienced before the pandemic. The data presents a mixed picture of the economic environment, which is being supported by industry activity.

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