Shanghai Composite. 'Arctic Fox' leaps on Shanghai street cornerReal estate has made China rich in recent years and decades. Now it looks more like radioactive kryptonite from the DC Comics universe - the birthplace of Superman.
Three months earlier, China's house prices fell 0.4% in a month, according to official statistics released in November 2023, the steepest drop since February 2015, according to Bloomberg data .
It was one sign that a key engine of the world's second-largest economy is still faltering despite Beijing's multiple stimulus packages.
At the same time, prices for secondary housing fell by 0.6% in October, which is the highest figure in nine years.
According to the Cato Institute data , private property accounts for 1/4 of China's total gross domestic product and nearly 70% of all household wealth.
This means that falling house prices have become a serious burden on the economy.
The situation is exacerbated by a seemingly endless debt crisis that has left the country's two largest property developers on the brink of collapse, with both Evergrande and Country Garden defaulting on bond repayments in recent years.
Evergrande serves as an example of how an industry that contributed to China's economic boom and prosperity for decades has become toxic and has become a point of weakness and decline.
The company was founded in 1996 and built huge residential complexes in the city center, helping to accelerate China's shift away from a socialist agrarian economy. The company eventually expanded beyond real estate, opening separate businesses selling bottled water and electric vehicles, and in 2010 it bought a Chinese soccer club that would go on to become the country's most successful team.
These days, the former giant is struggling for cash and facing liquidation.
China's fragile housing market is back in the spotlight at the start of 2024, following the release of a batch of fresh statistics.
China's troubled property market ended last year with the worst decline in new home prices in nearly nine years, despite government efforts to prop up a sector that was once a key driver of the second-largest economy.
New home prices in December showed their sharpest fall since February 2015, while property sales measured by area fell 23% in December from a year earlier, data from the National Bureau of Statistics (NBS) showed on Wednesday, January 17, 2024.
Of the 70 cities included in the NBS house price data, 62 reported falling prices.
Markets immediately responded with a strong decline, exacerbating the accumulated negative returns since the start of 2024.
Big China Indices Crash by Mid-January, 2024
At the same time, property developer investment in December fell year-on-year at the fastest pace since at least 2000, according to Reuters calculations based on NBS data. Overall, real estate investment fell 9.6% in 2023, roughly matching the decline in 2022.
Several Chinese developers, including China Evergrande Group HKEX:3333 and Country Garden HKEX:2007 defaulted on their offshore debts and entered into restructuring processes.
Country Garden, the country's largest private real estate developer, warned this week that it expects the real estate market to remain weak into 2024.
The technical main chart is dedicated to the Shanghai Composite Stock Index, which, judging by the current scenario, will experience far from the best year in its history, as a result of the index breaking down its narrowing multi-year range.
// Photo: “Arctic fox” leaps on Shanghai street corner .
💡 February, 2024 Notes
👉 Chinese stocks are falling for the 6th month in a row by February 2024 against the backdrop of the weakness of the Chinese economy, while SSE:000001 Shanghai Composite Stock Index fell below its 200-month SMA for the first time in its history.
👉 An extremely rare Bearish Super Combo in the Chinese financial market of 6 consecutive monthly declines is the result of disappointment with economic data and PRC government measures to support the economy.
👉 Industrial activity in China fell for the fourth month in a row in January, official data showed on Wednesday.
PMI indexes point to a bleak picture of continued contraction in manufacturing, roughly unchanged activity in the services sector and a slowdown in construction, Nomura analysts said.
👉 Weak economic recovery and limited support measures have affected investor sentiment.
The Hang Seng Tech Index of Hong Kong-listed tech giants HSI:HSTECH fell 20% in January, while Hong Kong-listed shares of mainland property developer Hang Seng index fell 19%.
