Mr. Lu Ting (Chief Economist, Nomura Securities) while addressing the Asia Steel Forum 2019 in Shanghai, China shared that markets could turn more volatile in the next couple of months. He indicated that RMB could depreciate further against $ and Chinese govt bond yields may drop further.
As per him, the major pointers that can be figured out in the current scenario are as follows :
– Slowing property sector has big impact on fiscal revenue & infrastructure investment
– Home appliances sales are driven by property cycles which are on down cycle. Property sales have slowed down
– China’s property sector’s rapidly rising leverage
– Property sector in 2019 is seeing weak sales, rising expenditure on construction. Property market conditions continue to worsen in low tier cities which account for 70% of China’s new home sales and land sales in revenue
– Escalation of US-China trade tariff and slowdown in the global economy
However, the strength of Chinese economies lies in massive size, good infrastructure, etc.
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