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China Property Weekly Post Summary (12 March 2014)

Core Content

This report provides an overview of the Chinese property market and related financial indicators as of 12 March 2014. It highlights the weak performance of property sales, the impact of mortgage activities, and the expected acceleration in project launches. It also includes stock market data, commodity prices, interest rates, and bond yields from various regions.

Main Points

Property Sales Performance

• Weak Sales: Average weekly property sales remained weak due to limited new residential projects and declining individual mortgage activities since the start of 2014.
• Sales Volume: In the week ended 9 March 2014, 33,000 residential units were sold in 40 cities, down 14% from the previous week and 34% year-on-year.
• Tier Performance:
  • Tier 1 cities: Down 30% WoW.
  • Tier 2 cities: Down 8% WoW.
  • Tier 3 & 4 cities: Down 17% WoW.
• Developer Performance:
  • Large developers like CGH saw YoY growth in contracted sales.
  • Smaller and mid-sized developers like Yuexiu and Glorious reported significant YoY declines.
• Expectations: With the approach of the traditional "Golden March, Silver April" season, the report expects an acceleration in project launches and a recovery in sales.

Project Launches in March

• Expected Launches: 560 projects are expected to be launched in March 2014, compared to 140 in February.
• Tier Distribution:
  • Tier 1: 197 projects (up 265% MoM).
  • Tier 2: 255 projects (up 410% MoM).
  • Tier 3 & 4: 108 projects (up 200% MoM).

Inventory Levels

• Total Inventory: Remained stable at 767.8k units in 17 cities, compared to 753.7k units in the previous week.
• Tier Inventory Changes:
  • Tier 1: Down 1.7% WoW.
  • Tier 2: Down 0.3% WoW.
  • Tier 3 & 4: Down 0.9% WoW.

Residential Land Transactions

• Decline in Land Transactions: Residential land transactions dropped significantly in the first 10 days of March, attributed to limited supply and tightened bank policies.
• Land Supply: Only 24% of land supply was used in February 2014 compared to 14% in February 2013.

Key Financial Indicators

Stock Market Performance

• HK Equities:
  • Hang Seng Index (HSI): Price 22,270, with a 0.0% change.
  • H-share Index: Price 9,520, down 0.2% YoY.
• China Equities:
  • CSI 300 Index: Price 2,109, up 0.5% WoW.
  • Shanghai Composite Index: Price 7,213, up 1.3% WoW.
  • Shenzhen Composite Index: Price 1,064, flat WoW.
• Asian Equities:
  • Nikkei 225: Up 0.7% WoW.
  • Korea KOSPI: Up 0.5% WoW.
  • Taiwan TWSE: Up 0.4% WoW.
  • India Sensex 30: Down 0.5% WoW.
• US/European Equities:
  • DJIA: Down 0.4% WoW.
  • S&P 500: Down 0.5% WoW.
  • NASDAQ: Down 0.6% WoW.
  • UK FTSE 100: Down 0.1% WoW.
  • Germany DAX: Up 0.5% WoW.
  • France CAC40: Down 0.5% WoW.

Commodity Prices

• Oil: WTI crude oil price at $100.03, down 1.09% WoW.
• Gold: Spot price at $1,348.0, up 0.5% WoW.
• Industrial Metals:
  • LME Copper: Spot price at $6,649.0, flat WoW.
  • LME Aluminium: Spot price at $1,775.5, flat WoW.
  • LME Nickel: Spot price at $15,450.0, flat WoW.
  • LME Zinc: Spot price at $2,040.0, flat WoW.

Interest Rates and Bond Yields

• HIBOR 3m: 0.37% (down 0.001% WoW).
• USD LIBOR 3m: 0.23% (down 0.001% WoW).
• Bond Yields:
  • US 3m Treasury Yield: 0.04% (up 0.01% WoW).
  • US 10y Treasury Yield: 2.77% (down 0.009% WoW).
  • China 2y Treasury Yield: 3.65% (flat WoW).
  • China 10y Treasury Yield: 4.49% (flat WoW).

Conclusion

The Chinese property market is experiencing weak sales due to limited project launches and declining mortgage activities. However, there is an expectation of increased project launches and a potential recovery as the market approaches its traditional hot season. The stock market showed mixed performance across different regions, while commodity prices remained relatively stable. The report also notes the differential performance among developers, with large firms outperforming smaller ones.