China set to halt real-time foreign stock data flow amid housing crisis; focus on positive market factors, reforms

view original post

The announcement of the move, which will be effective from Monday has sparked a rally in Chinese shares, suggesting that investors have embraced it and are shifting their focus towards positive factors
read more

Keep the bad news away. That’s what China plans from Monday as it is set to halt the real-time transmission of foreign stock flows aiming to bolster confidence by eliminating a potential stream of unfavourable data.

According to Bloomberg, the Shanghai and Shenzhen exchanges intend to discontinue the real-time display of local stock purchase or sale figures via trading links with Hong Kong opting instead to offer daily turnover details along with the 10 most-traded stocks via the northbound channel.

Advertisement

The announcement of the move has sparked a rally in Chinese shares, suggesting that investors have embraced it and are shifting their focus towards positive factors such as appealing valuations and government initiatives to alleviate the housing crisis.

Upon announcing their decisions on 12 April, the two bourses indicated that the changes would come into effect “in approximately a month”, without specifying an exact timetable, Bloomberg reported.

Nevertheless, according to the Asia Nikkei, the decision has sparked concerns among investors regarding data transparency, particularly noting that the new regulations will affect a significant trading link between Hong Kong and the mainland established in 2014.

Deepening housing crisis

Amid a continuing downturn in the housing market, home prices in China experienced a slump in March, prompting authorities in Beijing to seek urgent remedies for the nation’s real estate crisis, the Business Insider reported.

Data from the National Bureau of Statistics revealed that both new and used property prices in China declined compared to the previous year. Specifically, new-home prices in 70 cities, excluding state-subsidised housing, witnessed a 2.7 per cent decrease in March compared to the same period last year, exceeding February’s 1.9 per cent decline. The persistent decline in home prices highlights the challenges faced by policymakers in stabilising the housing market and addressing broader economic concerns.

Advertisement

Beijing’s renewed attention towards addressing the surplus in the housing market represents a significant shift in the perspective of senior officials towards China’s ongoing property challenges, the Wall Street Journal said. This shift sets the stage for potential rescue measures, ranging from unprecedented support for homebuyers to substantial state investment aimed at purchasing unsold properties.

The recent mention by Chinese policymakers of plans to explore policy to digest existing housing inventory has sparked extensive analysis, with experts highlighting it as the first public acknowledgement by top officials of the surplus apartment supply amidst a prolonged real estate downturn. Additionally, the indication to optimise policies on new housing supply suggests a governmental inclination towards expanding public housing options, the Wall Street Journal reported.

Advertisement

Upcoming third plenum in July

In July, China’s Communist Party Central Committee will convene its third plenum, a highly anticipated gathering poised to unveil a comprehensive reform blueprint. This plan aims not only to navigate economic challenges but also to steer the nation towards sustainable growth amid intensifying global competition, particularly with the United States.

Observers and experts anticipate a series of policy reforms targeting key economic issues including the pressing concerns surrounding mounting local government debt and the precarious state of the real estate sector, the SCMP reported. This meeting represents a crucial opportunity for China to bolster its economic resilience and solidify its standing on the world stage.

Advertisement