Finance

China’s top leaders call for halting real estate decline

Published

5 months ago

September 26, 2024

Business Finance News

Builders step up construction in Yuexi County, Anqing city, Anhui province, China, on Sept 25, 2024.

Cfoto | Future Publishing | Getty Images

BEIJING — China aims to stop the property slump, top leaders said Thursday in a readout of a high-level meeting published by state media.

Authorities “must work to halt the real estate market decline and spur a stable recovery,” the readout said in Chinese, translated by CNBC. It also called for “responding to concerns of the masses.”

Chinese President Xi Jinping led Thursday’s meeting of the Politburo, the second-highest circle of power in the ruling Chinese Communist Party, state media said.

The readout said leaders called for strengthening fiscal and monetary policy support, and touched on a swath of issues from employment to the aging population. It did not specify the timeframe or scale of any measures.

“I take the messages from this meeting as a positive step,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in an email to CNBC. “It takes time to formulate a comprehensive fiscal package to address the economic challenges, [and] the meeting took one step in that direction.”

Stocks in mainland China and Hong Kong extended gains after the news to close sharply higher on Thursday. An index of Chinese property stocks in Hong Kong surged by nearly 12%.

China: 'Unusual' to see such a combination of monetary measures at once, Goldman says

Real estate once accounted for more than a quarter of China’s economy. The sector has slumped since Beijing’s crackdown in 2020 on developers’ high levels of debt. But the decline has also cut into local government revenue and household wealth.

China’s broader economic growth has slowed, raising concerns about whether it can reach the full-year GDP target of around 5% without additional stimulus. Just days after the U.S. cut interest rates, the People’s Bank of China on Tuesday announced a slew of planned interest rate cuts and real estate support. Stocks rose, but analysts cautioned the economy still needed fiscal support.

Official data shows real estate’s decline has moderated slightly in recent months. The value of new homes sold fell by 23.6% for the year through August, slightly better than the 24.3% drop year-to-date as of July.

Average home prices fell by 6.8% in August from the prior month on a seasonally adjusted basis, according to Goldman Sachs. That was a modest improvement from a 7.6% decline in July.

“Bottom-out stabilization in the housing market will be a prerequisite for households to take action and break the ‘wait-and-see’ cycle,” Yue Su, principal economist China, at the Economist Intelligence Unit, said in a note. “This suggests that the policy priority is not to boost housing prices to create a wealth effect, but to encourage households to make purchases. This real estate policy is aiming at reducing its drag on the economy.”

PBOC's mortgage rate cut is a measure that could 'really save' China's real estate, says UOB

Thursday’s meeting called for limiting growth in housing supply, increasing loans for whitelisted projects and reducing the interest on existing mortgages. The People’s Bank of China on Tuesday said forthcoming cuts should lower the mortgage payment burden by 150 billion yuan ($21.37 billion) a year.

While Thursday’s meeting did not provide many details, it is significant for a country where policy directives are increasingly determined at the very top.

The high-level meeting reflects the setting of an “overall policy,” as there previously wasn’t a single meeting to sum up the measures, Bank of China’s chief researcher Zong Liang said in Mandarin, translated by CNBC.

He noted how the meeting follows the market’s positive response to the policy announcements earlier in the week. Zong expects Beijing to increase support, noting a shift from focus on stability to taking action.

Tempering growth expectations

The meeting readout said China would “work hard to complete” the country’s full-year economic targets.

That’s less aggressive than the Politburo meeting in July, when the readout said China would work to achieve those goals “at all costs,” according to Bruce Pang, chief economist and head of research for Greater China at JLL.

That shows policymakers are looking for middle ground between short-term growth and longer-term efforts to address structural issues, he said.

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Goldman Sachs and other firms have trimmed their growth forecasts in the last few weeks.

The change in tone about the economic targets signals “the government may tolerate growth below 5%,” the EIU’s Su said. “We estimate real economic growth to be around 4.7% in 2024, before slowing down to 4.5% (a moderate upward revision to our previous forecast).”

“The Politburo meetings on economic deployment usually take place in April, July, and October,” she said.

“The fact that this meeting was held earlier, along with the emphasis on stabilizing growth, reflects policymakers’ concerns about the current economic growth trend.”

Initial analyst reactions to Thursday’s meeting readout were varied.

HSBC said “the tide has turned; be prepared for more proactive initiatives.” Capital Economics, on the other hand, said Beijing’s hint at stimulus did not make it clear whether it would include large-scale fiscal support.

S&P Global Ratings analysts said in a report earlier this year that fiscal stimulus is losing its effectiveness in China and is more of a strategy to buy time for longer-term goals.

Senior officials in the summer told reporters that the economy needed to endure necessary “pain” as it transitioned to one of higher-quality growth with a bigger high-tech industry.

— CNBC’s Sonia Heng contributed to this report.

Finance

More traders turn bullish in first quarter, Schwab survey says

Published

20 minutes ago

February 25, 2025

Business Finance News

Traders work on the New York Stock Exchange (NYSE) floor on Feb. 20, 2025 in New York City.

Spencer Platt | Getty Images

An expensive stock market didn’t prevent traders from getting more bullish as investors increasingly bet that the bull run could keep chugging along, according to Charles Schwab’s new quarterly client survey.

The bulls continue to outnumber the bears among traders by 51% to 34%, said Schwab’s survey, which polled 1,040 active traders last month. Young traders under the age of 40 especially showed a spike in optimism, with bullishness jumping to 59%. That compares to 47% in the fourth quarter. The positive sentiment came even as two-thirds of the traders believe the market is overvalued, the survey said.

“It’s clear that the majority of traders believe there’s some froth in the market but on balance they also feel like there’s still more room for the bulls to run,” said James Kostulias, head of trading services at Charles Schwab. “More than half of traders plan to move additional money into stocks in Q1.”

While bullishness indicates positive views on the market, it can also be seen as a contrary indicator when there are signs of excess.

S&P 500

After a booming two-year period in which the S&P 500 climbed more than 50%, the momentum has slowed as of late with rising concerns about an economic slowdown and heightened volatility from rapid policy changes from the new administration. The equity benchmark is only up 1.3% on the year, while the tech-heavy Nasdaq Composite has dipped into negative territory for 2025.

In terms of sectors, traders are most bullish on energy, tech, finance and utilities. These sectors are typically beneficiaries under the Trump administration due to potential deregulation.

The survey also detected a significant drop in the number of traders who believe a recession will occur in the U.S. — only a third of the respondents called it “somewhat likely,” compared to 54% in the prior quarter.

The majority of traders also didn’t see a reacceleration in inflation, with two-thirds of them seeing price pressures holding steady.