Monday’s meeting of the Chinese Politburo, seen as an important body in informing China’s intentions, “set a more supportive policy stance” for the Chinese economy, including credit supply and the country’s housing market, a note from UBS Securities Asia Inc. said.
The Politburo meeting, led by UBS’ Hong Kong-based Asia economic director and China’s chief economist Tao Wang, “set a more supportive policy stance for the second half of this year,” according to Monday’s memo.
“Acknowledging sluggish domestic demand as a key factor in the current economic woes, the conference called for stronger ‘periodic’ macro policies to support the economy, along with structural reforms and measures to boost confidence,” the agency added.
“It is largely positive for market sentiment as it is about supporting economic growth, promoting private business investment and increasing investor confidence,” the message from the Politburo meeting said.
“We did not repeat the phrase ‘housing is not for speculation, it is for living’ at the Politburo meeting, instead highlighting significant changes in China’s real estate supply and demand situation and calling for adjustments in real estate policy in response,” the report said.
Investment analysts covering the Macau casino sector have previously noted that access to capital liquidity through the housing market has been a driver of some demand for Macau gambling among consumers in mainland China.
UBS said in an update on the mainland’s economic outlook: “A noticeable change in the real estate policy stance will provide more space for local governments to ease or abolish restrictions on the purchase of residual homes, lower down payment requirements for second mortgages and ease other relevant measures.”
With the global economy in turmoil, including the Russia-Ukraine conflict, there has been widespread commentary on consumer confidence in and around China, and China has emerged from nearly three years of COVID-19-related restrictions.
UBS said signals from the central government from Monday’s meeting regarding China’s housing market “may put more political pressure on banks to increase credit support for developers and consider lowering mortgage rates on existing mortgages.”
The agency also noted in its analysis that the Politburo meeting called for the use of a holistic and structural monetary policy “representing a more supportive monetary policy stance” from UBS’ perspective.
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