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China cuts key interest rate in the latest move to boost its ailing property sector
February 20, 2024--China's central bank announced Tuesday that it cut its 5-year loan prime rate while leaving its 1-year rate unchanged in the latest move to ease pressures on the ailing property market.
The 5-year rate was lowered by 0.25 basis points to 3.95% while the 1-year rate remains at 3.45%. It was the first time the 5-year rate was cut since May, and analysts said it was the largest cut on record for that rate.
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Source: apnews.com
Solactive and KB Asset Management Partner for the First Time with ETF Launch Tracking Realty Income Index
February 20, 2024--Solactive is delighted to announce KB Asset Management's introduction of the KB KBSTAR Global Realty Income ETF in Korea, tracking the Solactive Global Realty Income Index, marking the initiation of partnership and further expanding Solactive’s presence in the region.
The Solactive Global Realty Income Index comprises REIT securities known for their appealing dividend payments. Notably, Realty Income Corp and the Macquarie Korean Infrastructure Fund (MKIF) are included as fixed components.
Both constituents provide steady income streams to investors in the form of dividends and/or over-distribution of profits. Realty Income Corp is the largest net lease REIT in the market, providing monthly dividend distributions, while MKIF invests in landmark infrastructure assets of Korea. The remaining eight securities are chosen from the Industrial and Warehouse Equity REITs, Data Center Equity REITs, Manufactured Homes Equity REITs, and Tower Equity REITs sectors based on their dividend growth, offering strategic exposure to the long-term prospects of the real estate market.
The ETF listed on the Korean Stock Exchange on 20 February under the ticker code 475380.KS.
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Source: Solactive AG
JPMorgan AM to join China 'fundraising war' for CSI A50 ETFs
January 15, 2024--Move marks first time a 100% foreign-owned enterprise will compete directly with domestic managers at a launch
JPMorgan Asset Management's China retail asset management subsidiary will go head to head with about half a dozen top local fund houses after the Lunar New Year holiday to raise money for exchange traded funds that track a newly established index.
The move marks the first time a wholly foreign-owned enterprise will compete directly with domestic fund giants in a co-ordinated fund launch for identical products. It also comes amid red-hot investor interest in ETFs and could become a "fundraising war", one manager suggested.
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Source: ft.com
IMF Staff Country Report-People's Republic of China: Selected Issues
February 12, 2024--Summary:
SMOOTHING THE PATH TO A NEW NORMAL: CHINA'S PROPERTY SECTOR TRANSITION1
The Chinese authorities have taken resolute actions to address the risks from the property sector since
the start of the pandemic. The key challenge now is to smooth the transition of the sector to a smaller,
more sustainable size amid unresolved financial distress among developers, weakened home buyer confidence, and a backdrop of large inventories and structurally declining demand.
Key policy priorities should be to expedite the resolution of underlying supply-side imbalances, most importantly by
restructuring nonviable developers; support and de-risk surviving developers; and take steps to contain
the buildup of risks in the property market.
A. Introduction: China's Real Estate Markets at a Turning Point China's Real Estate Markets: An Overview
1. Real estate activity has been important for China's rapid growth but has come with
significant risks. Property-related activities accounted for an estimated 20 percent of GDP through
China's decades of rapid growth, with real estate ubiquitous as a form of collateral and household
wealth. While the authorities proactively limited risks from household leverage, average sales prices
still rose almost 350 percent in the 15 years through 2021 and remain at significantly stretched
levels relative to incomes. This price growth partly reflected strong investment-driven demand from
households, driven by massive savings, a mortgage lending boom, and limited investment alternatives. At the same time, the country's large developer sector leveraged up heavily to expand
construction at a rapid pace, often working closely with local governments who relied on property
activity for revenues.
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Source: imf.org
Japan: Staff Concluding Statement of the 2024 Article IV Mission
February 8, 2024--The Japanese economy continues to recover from the pandemic. Initially driven by cost-push factors, inflation is becoming demand driven with the output gap closed and labor shortages intensifying . In the near term, the focus should shift to tighten fiscal policy and wind down unconventional monetary policy, while maintaining financial stability.
In the medium term, the priority is to rebuild fiscal buffers, strengthen the fiscal framework, and advance structural reforms, with labor market reforms at the forefront, to support potential growth.
RECENT DEVELOPMENTS, OUTLOOK, AND RISKS
The economic recovery picked up in 2023 and the output gap is estimated to have closed. Core inflation (excluding fresh food and energy) seems to have peaked at a high level and is becoming demand driven.
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Source: imf.org
IMF Staff Country Report-People's Republic of China: 2023 Article IV Consultation-Press Release
February 2, 2024--Summary:
China has enjoyed decades of impressive growth, which has significantly improved living standards and largely eradicated extreme poverty. The growth has, however, been accompanied by widening imbalances and rising vulnerabilities, as excessive investment in infrastructure and housing has resulted in rising debt levels among property developers, local governments (LG), and local government financing vehicles (LGFVs).
The authorities have proactively sought to contain developer leverage. This has contributed to a significant, but needed, adjustment in the property market that continues to weigh on economic activity, including through its impact on LG finances.
Amid these structural challenges, the authorities have appropriately announced their goal to transition to high quality growth while tackling risks from the property sector and LG debt.
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Source: imf.org
China's Real Estate Sector: Managing the Medium-Term Slowdown
February 2, 2024--Accelerated cleanup of distressed developers and other policies will help smooth the path to a smaller, more sustainable role in the economy
Real estate has long been important for China's economy, driving its rapid growth in recent decades and accounting for as much as 20 percent of activity.
This reliance has, however, been accompanied by the buildup of significant risks.
Home prices became significantly stretched relative to household incomes in the decade before the pandemic, in part because consumers preferred to invest their considerable savings in real estate given the scarcity of attractive alternative savings options. Expectations of continued increases in home and land prices allowed property developers to borrow rapidly, with land sales providing crucial revenue for local governments.
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Source: imf.org
IMF Staff Country Report-Thailand: 2023 Article IV Consultation
January 30, 2024--Thailand's economic recovery from the COVID-19 pandemic and multiple shocks in 2022 is continuing, amid elevated uncertainty.
Growth is projected at 2.5 percent in 2023, broadly on par with 2022, while inflation is expected to remain well-within the authorities' target range.
Policies have gradually normalized to support growth and financial stability while protecting the population from the high inflation, but there is limited space to absorb new shocks. Heightened global uncertainty, with downside risks prevailing, puts an extra premium on prudent macroeconomic management.
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Source: imf.org
'Snowball' derivatives feed China's stock market avalanche
January 23, 2024--China's plunging stock market is leading to losses on billions of dollars worth of derivatives linked to the country's equity indexes, forcing a vicious cycle of selling in stocks and futures contracts as market participants manage their risks.
Stock markets in Hong Kong and in mainland China plunged on Monday, extending a long spell of weakness driven by an exit of foreign investors alarmed by China's wobbly economy and a lack of stimulus measures.
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Source: reuters.com
Homegrown asset managers grab limelight in Asia ETF boom
January 19, 2024---ChinaAMC, E Fund and Taiwan’s Yuanta have been among the biggest beneficiaries in the Asia-Pacific
Double-digit growth in exchange traded fund assets across many Asia-Pacific markets last year helped a handful of local fund firms strengthen their position as market leaders.
Taiwan, South Korea and China stood out as the fastest-growing ETF markets in the Asia-Pacific region during the first nine months of 2023, with ETF asset growth rates of between 26 per cent and 31 per cent, Broadridge data shows.
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Source: ft.com