AIS - EW Chart, page-1617

Copper climbs on optimism over Beijing easing property market crackdown

• Copper jumped to $8,455/t, up $200 since yesterday on media reports of a more accommodative policy from Chinese lawmakers to the suffering property sector.
• Bloomberg reports Beijing may offer more leverage to property, easing its stringent ‘three red lines’ crackdown on debt in the sector from November 2021.
• The Yuan advanced 0.4% and an index of Chinese developers climbed 3% on the news. High yield property bonds have also strengthened to their highest levels since January 2022 at 75c on the Dollar.
• The move comes as an additional sign Beijing is moving to shore up the sector’s growth prospects, having introduced its 16-point plan to shore up balance sheets late last year.
• Xi has continued to emphasise that ‘property is for living, not speculation,’ with the three red lines a move to burst a bubble that has been building in mainland Chinese property for over a decade.
• However, home sales tumbled over 2022, declining for 15 straight months. This hit China’s growth prospects, weighing on local government finances, real estate investors and the base metals demand.
• A retraction of the three red lines approach will mark Beijing’s largest policy shift to date on property, however future demand remains of a concern, with a surplus of apartment blocks across China remaining.