Modest gains in China’s new home prices give authorities breathing room

Updated 15 August 2019

Modest gains in China’s new home prices give authorities breathing room

BEIJING: China’s new home prices rose in July as the property sector held up as one of the few bright spots in the slowing economy, although easing momentum in some markets took immediate pressure off regulators to unleash major new curbs to deter speculation.
Average new home prices in China’s 70 major cities rose 0.6% in July from the previous month, unchanged from growth reported in June and marking the 51st straight month of gains, Reuters calculated based on National Bureau of Statistics (NBS) data on Thursday.
On a year-on-year basis, home prices rose at their weakest pace this year in July by 9.7%, slowing from a 10.3% gain in June.
Analysts said the moderate gains were a positive sign the market was not overheating. That helped the CSI300 real estate index recoup some of its earlier heavy losses following a major slide in global stock markets.
“Today’s data is actually pretty good, reflecting that tougher stance and not alarming at all,” said David Ji, Head of Research & Consultancy, Greater China at Knight Frank, referring to central policymakers’ July decision to not use the property market as a form of short-term stimulus.
“If I were a provincial official who has a ‘key performance indicator’ to hit, I would feel happy because it is clearly telling you the property market is off the peak.”
The politburo’s pledge in July not to overly stimulate the property sector, made at a high-profile work meeting, was interpreted by analysts as a warning to the investors against heavy bets on the market.
The Chinese government has clamped down on speculative investment in the housing market since 2016 to prevent a sharp correction as prices soared. There have also been growing concerns that high house prices are pushing up the cost of business and restricting consumer spending.
But efforts by some regional governments to attract talent through home purchase incentives, along with easing credit conditions have kept prices surprisingly resilient this year.
The majority of the 70 cities surveyed by the NBS still reported a monthly price increase for new homes, although the number of cities fell to 60 in July from 63 cities in June.
In a sign the market’s resilience may be waning in parts, property investment slowed to its weakest this year, data showed on Wednesday.
Concerns linger
Chinese authorities have sought in recent years to contain risks in the often volatile property market while not undermining growth in the broader economy.
The property sector directly impacts over 40 industries in China and a fast deterioration would risk adding to pressure the economy, which is slowing due to weak domestic demand and an escalating trade war with the United States.
While tightening measures have been rolled out across hundreds of Chinese cities, price trends have been uneven across the country.
Prices are holding up better than expected particularly in top tier cities, said Rosealea Yao, China investment analyst with Gavekal Dragonomics. Average prices in the four tier-1 cities — Beijing, Shanghai, Guangzhou and Shenzhen rose — 0.3% from a month earlier, quickening from a 0.2% gain in June, NBS data showed.
Pingdingshan, a city of 4.9 million in central Henan province, was the top price performer in July, with a robust monthly gain of 1.6%.
But economists also caution that the negative impact on the sector from the central government’s increasingly hawkish stance will only start to become more pronounced in two to three months.
China’s banks extended surprisingly fewer new yuan loans in July, reflecting subdued demand. New household loans, mostly mortgages, fell to 511.2 billion yuan in July from 671.7 billion yuan in June.
In a meeting on Thursday, the Shenzhen branch of China’s central bank said it will control second half growth of the city’s new real estate loans in a “reasonable” manner, according to state-owned Shanghai Securities News. It did not give details.
Home prices in tier-2 cities, which include most of the larger provincial capitals, increased 0.7% in July versus a 0.8% rise in the previous month. And Tier-3 cities rose 0.7% on a monthly basis, in line with June’s pace.
“I expect housing policies to tighten in China, especially for local governments that has infrastructure projects to support local GDP growth,” said Iris Pang, Greater China economist at ING.


Nissan’s new CEO willing to be fired if no turnaround at Japanese giant

Updated 18 February 2020

Nissan’s new CEO willing to be fired if no turnaround at Japanese giant

  • Makoto Uchida, who took over the top job in December, put his job on the line at the automaker’s shareholders’ meeting
  • Uchida pleaded with shareholders to be patient while he comes up with a plan by May to recover from crumbling profits

YOKOHAMA: Nissan’s new chief executive said on Tuesday he would accept being fired if he fails to turn around Japan’s second biggest automaker which is grappling with plunging sales in the aftermath of the scandal surrounding ex-chairman Carlos Ghosn.
Makoto Uchida, who took over the top job in December, put his job on the line at the automaker’s shareholders’ meeting, where he faced demands ranging from cutting executive pay to offering a bounty to bring Ghosn back to Japan after he fled to Lebanon.
Nissan’s worsening performance has heaped pressure on Uchida, formerly Nissan’s China chief who became its third CEO since September, to come up with aggressive steps to revive the company.
On Tuesday, Uchida, who was repeatedly heckled by shareholders, said he was ready to face dismissal if he failed to improve profitability at the company, which is on course to post its worst annual operating profit in 11 years.
“We will make sure that we steer the company in an effective way so that it is visible in the eyes of viewers. I will commit to this: if the circumstances remain uncertain you can fire me immediately,” he said.
Uchida, 53, did not give a timeframe for improving Nissan’s performance.
The new boss must prove to the board he can accelerate cost-cutting and rebuild profits at the 86-year-old Japanese giant, and that he has the right strategy to repair its partnership with France’s Renault, sources have told Reuters.
Uchida pleaded with shareholders to be patient while he comes up with a plan by May to recover from crumbling profits and a corporate shake-up following Ghosn’s arrest in Japan in late 2018 over financial misconduct charges.
“If you can be patient a little bit longer, on a day-to-day basis you will be able to sense we are changing,” he said.
Ahead of the meeting, some shareholders demanded more clarity about Uchida’s plan.
“I just want to know what the plan for recovery is. At the moment, the share price has dropped again, and the value of the company has plummeted,” said a 70-year-old former employee who owns shares in the company.
“If this is the situation, part of me thinks that we would be better off with Ghosn ... If we don’t get a clearer vision of the path the company is taking, it will be a worry.”
Nissan’s shares are trading around their lowest level in more than a decade following its latest earnings.
Last week, Nissan cut its dividend outlook to its lowest since the 2011 financial year, after dwindling car sales drove the company to post its first quarterly net loss in nearly a decade.
Shareholders gathered at the extraordinary meeting in Yokohama to vote in new directors including Uchida and Chief Operating Officer Ashwani Gupta.
Their appointments highlight a changing of the guard at Nissan, as shareholders were also voting on motions for former company stalwarts, CEO Hiroto Saikawa and COO Yashuhiro Yamauchi, to leave their board director positions.