BEIJING (Reuters) – China’s property investment hit a two-year low in December even as it grew at a solid pace in 2019, adding to recent signs of a slackening in the sector and suggested Beijing might need to offer more stimulus to stabilize a cooling economy.
Real estate investment, which mainly focuses on the residential sector but includes commercial and office space, increased 9.9% in 2019 from the year-earlier period, down from 10.2% in the first 11 months but still outpaced a 9.5% gain in 2018.
In December alone, year-on-year growth slowed to 7.3% from 8.4% in November, the weakest pace since December 2017, according to Reuters calculations based on data released by National Bureau of Statistics (NBS) on Friday.
The reading was in line with other activity data out on Friday that showed the world’s second-largest economy grew 6.1% in 2019, the slowest in 29 years, and was likely helped by looser monetary policy as it gave developers relatively easier access to credit.
New bank lending in China hit a record of 16.81 trillion yuan ($2.44 trillion) in 2019, while China’s central bank has announced eight cuts in banks’ reserve requirement ratio (RRR) since early 2018, freeing up more funds and driving down lending costs.
“There was some slowdown in December but we don’t need to be too concerned with property because things are improving on the financing side,” said Yang Yewei, a Beijing-based analyst with Southwest Securities, who noted an increase in mortgages in December.
Funds raised by China’s property developers grew 7.6% in 2019 year-on-year, NBS data showed, faster than the 7% pace in the first eleven months.
Chinese property developers kicked off the new year with a strong pipeline of bond issuance, in particular for long-tenor notes, taking advantage of easier regulatory approvals and robust market demand.
But analysts say investment in actual construction has slowed notably as developers exercised caution, although they appear still eager to bid for land.
Measured by floor area, new construction starts rose 7.4% in December from a year earlier, recovering from a 2.9% decline in November when it hit the worst level seen in more than two years, according to Reuters calculations.
Land sales by floor area in 300 major cities tracked by China Index Academy fell 1% on-year in 2019, while transaction value surged 19%, providing a much needed boost to local government purse strings.
SLUGGISH SALES
The government is keen to defuse housing bubbles after years of supercharged price gains. However, since the real estate sector remains a key pillar of the economy, any more weakness could influence the pace and scope of fresh stimulus measures expected from Beijing this year.
Property sales by floor area, a major indicator of demand, fell 0.1% in 2019 from a year earlier, marking the first full-year decline in five years since the last downturn in 2014, when it slumped 7.6%, the NBS data showed on Friday.
In December, they fell 1.7%, compared with a modest increase of 1.1% in the previous month, ending five months of consecutive growth, Reuters calculated from official data.
Analysts say a continued downturn in sales on the back of government controls to curb speculation will constrain price growth in coming months, dampening developers’ appetite for front-loading construction.
Data on Thursday showed China’s new home prices grew at their weakest pace in 17 months in December, with broader curbs on the sector continuing to cool the market in a further blow to the sputtering economy.
Some analysts say the government could potentially dial back stimulus when economic growth stabilizes in order to lower debt risks.
“It is likely that the government could take the chance of an economic warm-up to consolidate local government finance and continue the property market control, which might set an up-limit for GDP growth in this year,” J.P. Morgan Asset Management Global Market Strategist Chaoping Zhu wrote in a note.
(Reporting by Yawen Chen and Ryan Woo; Additional Reporting by Stella Qiu; Editing by Shri Navaratnam)
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
