China
We’ve written a few notes on China, of late, there’s plenty of news flow.
The latest set of announcements are of support for the property sector, basically, the same mix of support as always, for distressed industries, namely extending maturities, extending repayment periods, facilitating takeovers (stronger balance sheet companies taking on marked down debt of weaker ones, but ensuring that projects continue to be developed) and the like.
This is excellent for sentiment, in the near term, and of course, solves nothing in the medium-longer-run for the sector. The issue is fundamentally about overinvestment, mal-investment, unproductive investment, and that the investment share of GDP has to come down.
However, we will happily use any positive tailwinds/sell-into-strength, as a general portfolio stance, and you can see (above) just how decimated China’s property sector has been. Those 20-30% bounces are almost barely visible against the broader declines.
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