Societe Generale economist discusses Chinese property market

what do you make of some of the moves by the authorities this week the reports suggesting that the government might actually be sort of mopping up some of these unsold homes now how significant could this move be particularly when you look at the the wealth effect and when do you think such initiatives and moves by the government could actually start to move the needle in terms of the new home prices and bringing back some of that demand when do you think that will show up in the numbers so I think in terms of uh how long it took to show up in the numbers right now we still really haven't got the announcement uh in the April po liberal meeting uh we know that the government said that they're now studying the measures um but I think um if they are really serious about that given the signal from the top I think we could get some measures maybe pretty pretty quickly maybe the uh maybe even June and uh before the poal meeting but in terms of like really the even I think if we uh give pretty best case scenario of uh like maybe money going out to the local governments to buy some of the unsold properties uh I think it will really take some time to really fit into the uh house prices because right now the the confidence of people are still pretty weak so I think the best case we talking about is that maybe house prices uh could be stabilizing around the turn of the year um and uh and I think for the Investments because there's really structural mismatch uh between the demand and supply and I think uh it's still going going to be some correction for this year before some stabilization maybe the uh in 2025 um but I think in terms of this measure the I think the most significant take away to me is really about reducing the downside risk to a uh to a continue D spiral between the house prices and sales because if we look at what happened in Japan or in Hong Kong the it actually take a pretty long time for us to see the house prices correction talking about like a like a seven or even the 10 to 20 years of of a lingering impact on the household confidence if we are we are not we are not lucky um so I think it's the now that the government really noticed that this is getting uh very serious and they they they make a shift about the attitude towards this Absolut so I think this is pretty significant and to be fair already uh a lot of negative uh downside RIS have already priced the market so that's why we really seeing the property stocks reacting positively to this news Michelle can you give us a line on the currency and despite the manufacturing Trade Surplus the balance of payments Surplus we are seeing pressure on the Chinese currency is that down to the fundamentals still is that down to strong dollar and where then does that leave at beijing's uh reaction function in addressing this I think uh well lately look at the currency like even the the weak CPI from the US actually is sort of like having some support from that so at the end of the day it really still boils down to the how the uh fat is managing the the inflation problem uh in the in the US but I think for China I think what people are concerned about is probably what uh uh is happening on the uh on the geopolitical funds uh for example for this week we had some the tariffs implementation by the Biden Administration on China goods and it's for I think to some extent it's POs to see that it is very measur very targeted so we don't really expect any the significant me impact from that type of measures that uh I think investors could be like fast forward looking to like if uh uh if the Trump wins the US election uh at the end of the year then what that means for the tariffs uh the trade policy for China and uh maybe to some extent people are pricing in uh some uh like from from the options definitely we seeing some prising that neity that

Channel: CNBC International TV

Views: 1,401

Keywords: Asia: Squawk Box

Id: gKQjxdgOQVM

Length: 3min 53sec (233 seconds)

Published: Fri May 17 2024