The latest snapshot of Chinese house prices will be released on Wednesday, and again, another weak report could be in store, with the country’s property sector in a genuine state of crisis.
JP Morgan on Tuesday said if developer Country Garden suffers a full-scale default, it will more than double China’s year-to-date property default tally to $17 billion, adding to the $100 billion racked up over the past two and a half years.
The People’s Bank of China may have finally pulled the interest rate lever, but it had the expected impact of slamming the exchange rate. The offshore yuan tumbled through 7.30 per dollar to its weakest level this year and is now flirting with November’s historic low of around 7.35 per dollar.
Compare and contrast China with Japan, as per Tuesday’s bumper Q2 GDP data, and the U.S., where figures on Tuesday showed a surge in retail sales. The Atlanta Fed’s GDPNow model is projecting annualized Q3 growth of 5.0%.
Global stocks, Wall Street and emerging markets all buckled on Tuesday under the weight of rising bond yields, ‘higher for longer’ Fed rate expectations and a buoyant dollar.
The MSCI Asia ex-Japan index fell for a fourth day and has now only risen twice in the last 11 sessions. Among the biggest losers in Asia on Tuesday was Hong Kong’s mainland property index, which fell 1% to take its year-to-date decline to 16%.
