China’s property sector risks falling into bear market – Citibank

Dhwani Mehta FXStreet

China’s home prices are at risk of “meaningful downside” regardless of what happens to China Evergrande Group, Bloomberg reports, citing analysts at Citigroup.

Key quotes

“It seems clear that even in an orderly restructuring, the property sector in China is likely to face downside pressures. “

While authorities try to limit lower real estate prices due to fire sales by Evergrande by implementing price floors, price controls typically do not work.” The note was titled “A Bear Market in Chinese Property.”

“The fallout would be most pronounced in global commodity markets, as well as emerging-world credit and currencies,” Citigroup’s simulation-based on China’s last severe property downturn in 2014 showed.

“We fear that the China slowdown will eventually have an impact on commodities, which are a key economic driver for many EM economies.”

Two potential catalysts to watch for fall volatility – Morgan Stanley

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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