China attempts another rescue of its struggling housing market
Stubborn inflation to Americans is what a housing slump is to China — a never-ending nightmare that just won’t go away. China’s property sector has defaulted on $124B in bonds, and housing inventory is at an eight-year high, with consumers hesitant to spend. In response on Friday, China announced $42B in bonds to buy excess housing inventory and turn it into affordable housing while also lowering the minimum down payment from 25% to 20%.
- Zhu Ning from the Shanghai Advanced Institute of Finance compared this to “the bailing out of financial institutions going through the Great Financial Crisis.”
- New data released on the same day shows property prices fell 2.5% in April from the previous year.
Discount hunting: Despite these issues, things are looking up in the manufacturing-heavy economy. China’s industrial production rose 6.7% in April, beating Bloomberg’s 5.5% forecast. Thanks to several stimulus rounds, China finally entered a bull market this year — joining other nations where stock markets have ripped higher, and hedge funds are getting bullish. David Tepper’s Appaloosa Management even made Alibaba its largest position.
