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China’s Property Woes Pour Cold Water Over Steps to Boost Stocks

AN INTERVENTION in the stock market. Liquidity injections by the central bank. More curbs on short selling. And yet, Chinese stocks cannot escape the real estate sector’s spiral of gloom.

Data this week showed that property investment – a key driver of China’s economic activity – continued to slump, while home prices fell at the fastest pace in almost a year in September. That negated investor optimism over a data showing a pickup in third-quarter economic growth.

The main CSI 300 Index slid more than 4 per cent to cap its worst week in a year on Friday, erasing all the gains seen during its epic reopening rally that took off late last year. The sell-off came despite the slew of market-boosting policies, including tightening of curbs on short-selling activities.

“Investors need to see a way out of all the major problems, like the property woes,” said Hao Hong, chief economist at Grow Investment Group. 

“How Beijing manages its property market and handles its relationship with the US” are key, he said, adding that “nobody cares about economic data” right now.

Weakness in global stocks spurred by geopolitical tensions in the Middle East worsened the pain for China’s market, with foreigners offloading 24 billion yuan (S$4.5 billion) of onshore stocks on a net basis this week. That is the most since the week ended Aug 18.

Source: The Business Times