Mikkel Rosenvold
9 weeks ago

Analyst: No way back for this Chinese sector

China is on the move again - but this sector is holding its' own consumer class back
Empty apartment house high rise building construction background
Roman_studio / Shutterstock.com

With China looking for a 5% GDP growth in 2024, there is still much concern regarding the country's real estate sector, analyst Elias Lisberg of Steno Research concludes.

The leading Chinese Li Keqiang index has surprised to the positive side in recent postings, but the Chinese private investors and consumers remain tightly wrapped up in Real Estate debt.

This leads to many Chinese families lacking the liquidity to carry out major investments in their home or their life, which is holding back Chinese growth and domestic manufacturing demand.

Meanwhile, markets are crowding to get in on the current Chinese bull case. Many expect positive trends from the US stock markets and manufacturing to spill over to the still largely export-driven Chinese economy. In that case, China could be an interesting investment option.

Elias Lisberg of Steno Research specifies: "Asian FX broadly looks cheap versus the cycle still and KRW (and Kospi) is an obvious directional vehicle, if you are slightly less esoteric of choice. Jay Powell and his ilk at least played ball with this reflation view for now!"

The Chinese real estate boom, spanning from around 2000 to 2020, represents a significant period of economic expansion and transformation within China, profoundly impacting its urban landscape, economy, and global investment flows.

This era was characterized by rapid urbanization, with millions moving from rural areas to cities, fueling an unprecedented demand for housing and commercial spaces. The government's policies, including land lease reforms and the encouragement of foreign investment, played pivotal roles in driving this boom.

Developers, often state-backed, embarked on massive construction projects, leading to the rise of new cities and the expansion of existing ones at a scale and pace rarely seen elsewhere. Real estate became a crucial component of China's GDP growth, attracting domestic and international investors alike.

However, this period also saw the emergence of challenges, including speculative bubbles, soaring debt levels among developers, and concerns over sustainable development and housing affordability. The boom has left a lasting imprint on China's economic landscape, with ongoing implications for its urban development strategy and financial stability.


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