Iron ore to the moon as China stimulates! Fastmarketts MB has spot at $105.63:
Dalian flew further Friday night and SGX is led by Shanghai rebar:
Here it is!
China is working on a new basket of measures to support the property market after existing policies failed to sustain a rebound in the ailing sector, according to people familiar with the matter.
Regulators are considering reducing the down payment in some non-core neighborhoods of major cities, lowering agent commissions on transactions, and further relaxing restrictions for residential purchases under the guidance of the State Council, the people said, asking not to be named because the matter is private.
The government may also refine and extend some policies laid out in the sweeping 16-point rescue package it rolled out last year, the people said. The plans have yet to be finalized and may be subject to change, the people added. China’s housing ministry didn’t immediately respond to a request for comment.
I don’t want to be too negative here but is that it? A few more cheap mortgages? And refinement of existing policies?
Let’s wait and see what they come up with but if it is anything like that then it will fail. Demand is weak because:
- everybody knows the Chinese urbanisation story is at an end as aging takes over,
- nobody trusts that Xi Jinping won’t backflip in two weeks and crush the housing market again,
- youth can’t get a job and certainly can’t afford property, and
- nobody trusts the half-dead and still-dying development sector to deliver on projects.
Supply is weak because:
- demand is weak,
- developers can’t get finance, and
- idle inventories are so immense that the last 200m or so people who might move the cities, but probably won’t, are already built for.
To turn that around, Bejing will need to make a full-blown, no holds barred commitment to centralised and nationalised extreme stimulus, as well as deliver a full bailout for Evergrande & Co. And probably cut the cash rate to zero, devastating the yuan.
It’s not obvious why it would do that but, hey, this is a dictatorship!
Sales aren’t that bad!
But developer spreads are:
What’s more, all of this talk of housing stimulus means no talk of more infrastructure, which would actually add steel demand:
Leaving steel in the hole:
I await the housing bailout with bated breath.
