Scuttlebutt is the new currency in the Chinese property adjustment:
Speculation circulated after the mid-day break about lenders being asked to increase developer loans, driving traders to take the opportunity to bargain hunt despite skepticism. A Bloomberg Intelligence gauge of Chinese developers jumped 3.7%. The gains offset a selloff of tech shares as Alibaba joined Tencent Holdings Ltd. to become the latest online giant that missed estimates in this earnings season.
Yawn. The following excellent video from China Beige Book is all you need to know about China’s “paradigm shift to much lower growth”:
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That said, the week’s data improved a little as policy calibration comes to bear. Developer spreads narrowed:
Property sales improved with a big near year test looming:
However, land sales remain disastrous:
I suspect what’s happening was nicely captured by some developer quotes during the week:
…staff at a mid-sized property developer headquartered in south China said that the company is no longer holding investment strategy meeting since October. “Some people who used to work for the investment department have been transferred to sales positions.”
“The current strategy is to do everything to survive and to cut spending and investment as much as possible,” he said.
A person from anther developer said that many real estate companies has suspended or slowed new constructions to cut spending.
Sell like mad, don’t invest. Survive. This will mean developers run down inventory before growing starts again. Not good for construction volumes.
For infrastructure, there was some offset for the local government land sales catastrophe in stronger borrowing:
We might actually get close to exhausting the quota by year-end though that will still mean any investment flow is months behind 2020.
China has managed to contain the adjustment for now but that only means it will not end any time soon.
Ready yourself for China’s “paradigm shift to much lower growth”.