No 819 - Underpining property

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BANDSFinancial

磐石金融有限公司（ BANDS Financial Limited ）在香港注册成立，是一家持有香港证监会（SFC）2号牌照的期货经纪公司，业务涉及中国以外全球大部分活跃期货及期权市场。

At 9.15 am this morning the PBOC reduced the Loan Prime Rate (LPR) to 3.7% from 3.8% in a strong signal that it will support growth to counterweight the slowing Chinese economy amid property debt failures and small but persistent COVID-19 outbreaks. Bank analysts expect further cuts to the one-year LPR throughout this year. The five-year rate was cut to 4.60% from 4.65% suggesting Beijing caution in using monetary policy to stimulate the property sector to support growth.That is because the property sector is receiving help from elsewhere. Reuters carries a story this morning that Beijing is drafting rules to enable property developers to access funds that have been prepaid for houses or apartments. Chinese developers are allowed to sell residential projects before completion but are required to put these prepaid funds perhaps between 50% and 70% of the property value in escrow accounts. Up to now, these funds have been held by municipal governments, who in the current situation have a multiplicity of views on how these funds can be accessed, if at all. The news of the pending publication of unified Beijing guidelines lifted the property sector bellwether Evergrande about 4% in HK yesterday, and Evergrande has continued to move higher this morning rising another 4% by lunchtime.Trading on the impression that Beijing is unpacking its big safety net, Chinese equity markets have moved higher, the CSI 300 is up around 1% led by the banks, and Shimao and other mainland real estate stocks have risen more than 10%. In the commodity futures space, stainless steel is trading at limit-up, up 8%.However, we now enter a drought regarding Chinese data as the calendar is largely empty until the 30th of January when we get the NBS PMIs, and until then, we will have to revisit our old friends, rumour and conjectureHave a good day

John