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China’s commercial property segment is seeing some bright spots

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Illuminated skyscrapers stand at the central business district at sunset on November 13, 2023 in Beijing, China.

Vcg | Visual China Group | Getty Images

BEIJING — China’s commercial property sector is seeing pockets of demand amid an overall real estate slump.

The capital city of Beijing is seeing rents for prime retail locations rise at their fastest pace since 2019, property consultancy JLL said in a report Tuesday. Rents increased by 1.3% during the first three months of this year compared with the fourth quarter of 2023, the report said.

Demand from new food and beverage brands, niche foreign fashion offerings and electric car companies has helped drive the interest in shopping mall storefronts, according to JLL.

The firm expects the demand to persist throughout the year, helping boost rents, which remain well below pre-pandemic levels.

Commercial real estate, which includes office buildings and shopping malls, makes up just a fraction of China’s overall property market.

China's secondhand property market is 'very buoyant,' says real estate investment firm

Sales of offices and commercial-use properties rose 15% and 17%, respectively, by floor area, in January and February from a year earlier, according to Wind Information.

In contrast, floor space of residential properties sold dropped by nearly 25% during that time, the data showed. Sales for both commercial and residential properties had fallen for much of last year, according to Wind.

Covid-19 restrictions on movement had also cut demand for China’s commercial property, in line with global trends. China’s economy, however, took longer than expected to rebound from the pandemic, amid a broader slump in the property market.

Getting cheap enough to buy

China’s commercial real estate prices are nearing an attractive buying point, Joe Kwan, Singapore-based managing partner at Raffles Family Office, said in an interview last week.

“We do have an internal timeline or projection of how far valuation has to fall before it makes it attractive for us,” he said. “I think the opportunity is about to open up for us right now.”

Kwan said he expects to start making deals in the second half of this year, through next year. The firm is primarily looking at commercial properties in Shanghai and Beijing.

Such bargain-hunting is not necessarily a sign that the market is on its way to a full recovery.

“What we have been observing is that owners [have] been throwing us the same opportunities, some of the same portfolios, but at a much discounted price on a quarterly basis,” he said. “So from that it gives us the general sense that it’s still going to be some way down the road before we can see the bottoming.”

“We do have still a very positive outlook on the longer term a prospect of China, given its size of population, given its demographics, given its consumption numbers,” Kwan said. “I think that right now it is going through a territory whereby it may overcorrect and people might miss out on the opportunity to acquire some really, really well-located, good-quality assets that will prove to be a winner, maybe not in the next two to three years, but at least in the mid-term.”

Hong Kong-based Swire Properties said in its report last month that it intends to double its gross floor area in mainland China by 2032. The company currently operates high-end shopping complexes branded “Taikoo Li” in Beijing, Shanghai and other major cities in China.

“In the Chinese Mainland, foot traffic has improved significantly and retail sales have exceeded pre-pandemic levels for most of our malls since pandemic-related restrictions were lifted. Our office portfolio has proven to be resilient despite a weak office market,” Tim Blackburn, Swire’s chief executive, said in the report.

Looking ahead, the company expects 2024 will be a “year of stabilization” in retail demand.

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Trump says ‘stupid’ Powell ‘probably won’t cut’ rates Wednesday

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Trump says 'stupid' Powell 'probably won't cut' rates when Fed meeting ends Wednesday

With the Federal Reserve just hours away from its latest decision on interest rates, President Donald Trump on Wednesday lambasted Chair Jerome Powell, calling him “stupid” while doubting the central bank would cut.

In his latest in a series of attacks on Powell that go back years, Trump said the Fed’s key borrowing rate should be at least two percentage points lower.

“So we have a stupid person. Frankly, you probably won’t cut today,” Trump said in impromptu remarks just outside the White House. “Europe had 10 cuts, and we had none. And I guess he’s a political guy, I don’t know. He’s a political guy who’s not a smart person, but he’s costing the country a fortune.”

The remarks came just about four hours before the rate-setting Federal Open Market Committee was to release its statement on interest rates, along with an update of where it sees policy and several key economic measures heading over the next several years.

Market pricing indicates no probability of cut at this meeting, with the next move expected in September. The Fed currently targets its overnight borrowing rate in a range between 4.25%-4.50%.

Powell and his colleagues have expressed hesitation about adjusting rates with so many unanswered questions regarding the economy.

For one, the longer-term impact of Trump’s tariffs is not known. Inflation indicators are little changed since the tariffs were implemented in April, but various factors have colluded to keep blunt the impact.

Trump, though, said higher interest rates rates are costing the U.S. “hundreds of billions” of dollars in financing costs that could be saved if the Fed would ease.

“If he’s worried about inflation, that’s OK. I understand that. I don’t think there’s going to be any. So far there hasn’t,” Trump said.

“But now we have a man that just refuses to lower the Fed rate, just refuses to do and he’s not a smart person,” the president added. “I don’t even think he’s that political. I think he hates me, but that’s OK.”

Trump and Powell recently met at the White House, though little has been disclosed about what was discussed. Powell and his colleagues have vowed they will not be swayed by political pressure, which has ramped up to include other administration officials, including Vice President JD Vance.

Trump even mused about appointing himself as Fed chair, saying, “I’d do a much better job than these people.”

Powell’s term expires in May 2026, and Trump has said he intends to name a successor soon.

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RUN, KFY, ORCL, CRCL and more

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Artificial intelligence subcategory undergoing golden age: Dan Ives

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Dan Ives on the inner-workings of his new AI ETF and how it compares to the competition

Wedbush Securities’ Dan Ives, who launched an artificial intelligence exchange-traded fund this month, sees software as the subcategory to watch within the space.

According to Ives, it’s experiencing a “golden age.”

“Software is going to be driving … a lot of the use cases,” the firm’s global head of technology research told CNBC’s “ETF Edge” this week. “But it’s trying to understand: Who within software? Just because they say ‘AI’ on a conference call doesn’t make them an AI player.”

Ives runs the Dan Ives Wedbush AI Revolution ETF, which trades under the ticker IVES. Ives’ goal is to focus on stocks that are transforming the AI landscape.

“I believe the market is still massively underestimating what the growth is going to look like for the AI revolution in tech,” he said. “For us, it’s not just Mag Seven. It’s not just those first four or five names… It’s trying to identify names that maybe today thematically you don’t even consider an AI name.”

He forecasts Oracle will be “the epicenter of the AI theme over the next six, nine, 12 months in terms of software.” As of Tuesday’s market close, Oracle shares are up almost 62% over the past two months. It’s IVES’ fourth-largest holding, according to the firm’s website.

IVES’ other software holdings include Palantir, IBM and Salesforce. They’re also winners over the past two months — with Palantir shares soaring more than 47%.

Altogether, IVES’ holdings cover 30 companies that span multiple industries. They include hyperscalers, cybersecurity, consumer platforms and robotics. According to Ives, the list was compiled from his deep dives into major AI players.

“Around the world investors always say, ‘How do you play AI? How do you play the theme?'” Ives said. “All of our research can put it in a way investors could play this regardless of where they are and who they are.”

The fund’s top three holdings overall are Microsoft, Nvidia and Broadcom, but it also includes smaller tech names like SoundHound and Innodata

IVES is up almost 3% since its June 4 launch. In an email to CNBC, Ives wrote that the ETF has $183 million in assets under management as of Tuesday’s market close.

Ives plans to reevaluate the AI 30 every quarter.

“There could be a name today that’s not on there,” he said. “Six months from now, if we find that’s a name that’s become more and more of an AI play, then we’ll put them on there.”

Ives contends the tech trade is still worth the investment even for investors who have missed out on the run over the past few years.

“If you focus just on valuation, you miss every transformational tech stock of the last 20 years,” Ives said.

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