Wednesday, July 20, 2016

What Is Really Happening In China 
May Surprise People
"The number of price gains in 70 China cities surveyed moderated on a m/o/m basis. For new apartments, prices rose in 55 cities in June vs 60 in May and 65 in April. In December there 39 cities that saw price increases. For existing apartments prices rose in 48 cities, down 1 from May and down 3 from April. In December it was at 37. On a y/o/y basis for both new and existing apartments however, prices grew in even more cities than the month prior. Price gains are still out of control in the major cities with Shenzhen seeing a 47% y/o/y increase but that is actually down from 53% in May. Prices in Shanghai were up 28% vs last year, the same pace as the prior month and they were higher by 20% in Beijing. Acknowledging the bubbles, these cities have taken steps to curb the enthusiasm by raising down payment requirements for 2nd homes among other things. Prices in 2nd tier cities slowed. Bottom line, Chinese government policy remains all about managing the excesses that have built up over the past 7 years in order to slow the pace of growth in an orderly manner. Smoke and mirrors is how they are doing it but the process continues. Either way, as seen in the U.S., it is taking more and more debt to generate the same level of economic growth. The Shanghai property stock index fell .7% in response to the m/o/m price slowdown while the Shanghai comp was lower by .4%. The yuan was also softer with it now above 6.70 vs the U.S. dollar for the 1st time in 5 yrs. The H share index though was up by .5% with most of Asia modestly up. Copper is down about 1%."
- Peter Boockvar
link here to the reference

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