Moody's downgrades major Chinese property developer Vanke
by AFP Staff Writers
Beijing (AFP) Mar 12, 2024

Moody's has downgraded one of China's largest housing developers' credit rating, as woes in the country's property sector show no sign of abating.

China's real estate market is grappling with unprecedented challenges, with some developers on the verge of bankruptcy and lower property prices deterring consumers from making investments.

Vanke -- long considered to be financially stable -- is one of several major Chinese developers to run into trouble, with Moody's on Monday downgrading its rating to "Ba1", indicating it has "substantial credit risk".

It said the firm's contracted sales had fallen around 40 percent -- to 34.5 billion yuan ($4.8 billion) in just the first two months of the year.

"Moody's expects volatile operating and funding conditions for China's property sector to continue to drag on China Vanke's contracted sales, access to funding and liquidity," the rating agency said Monday.

The hurdles facing the firm would continue for "the next 12-18 months", it added.

It did not rule out further downward revisions to Vanke in the future.

Vanke was the second-largest developer in China last year in terms of sales, according to specialist firm CRIC.

It is part-owned by the city government of Shenzhen in southern China -- once seen as a guarantee of its solidity.

But setbacks make it the latest Chinese developer to be caught up in a mounting crisis within the real estate sector, following Evergrande and Country Garden.

The industry, which once experienced two decades of meteoric growth as living standards rose across China, has long accounted for more than a quarter of the country's GDP.

In a bid to revive activity, authorities have introduced various incentive measures and made announcements of state support.

But such efforts have so far had little impact on the ailing sector.

Chinese Housing Minister Ni Hong acknowledged the difficulties in stabilising the market during a press conference on Saturday.

Real estate companies that "need to go bankrupt should go bankrupt, and those that need restructuring should be restructured", he said.

Most markets push higher as US inflation data looms
Hong Kong (AFP) Mar 12, 2024 - Equity markets mostly rose Tuesday following the previous day's sell-off, with focus on the release of US inflation data that could play a key role in the Federal Reserve's decision-making on cutting interest rates.

The broadly upbeat performance came despite a tepid showing on Wall Street, and with analysts warning the recent rally across equities could stall as investors lock in profits and assess the outlook for monetary policy.

There is a lot of nervousness on trading floors ahead of the February consumer price index report due later in the day after a surprise uptick in January that dented hopes the central bank would begin cutting rates sooner rather than later.

Futures traders are now betting on three reductions this year, compared with the six forecast at the start of the year.

"It is imperative to avoid a repeat of the last CPI release," said SPI Asset Management's Stephen Innes.

"Another report similar to January's could raise doubts about the Fed's rate cut wisdom in 2024. If the inflation dragon shows up again, it will not sit well with risk appetite."

Hong Kong pressed ahead with its recent advance, climbing more than three percent, helped by fresh buying of tech firms and following above-forecast Chinese inflation data at the weekend that soothed worries about the country's economy.

Electronics giant Xiaomi surged more than 10 percent after saying it will start deliveries of its first electric vehicle by the end of this month.

There were also gains in Sydney, Seoul, Singapore, Taipei, Mumbai and Manila.

However, Tokyo fell again as speculation swirls that the Bank of Japan will next week shift away from its ultra-loose monetary policy that has helped strengthen the yen.

Shanghai, Wellington and Bangkok also fell.

London, Paris and Frankfurt rose at the open.

Traders brushed off a broadly negative day on Wall Street, where investors have pushed equities to multiple record highs this year, and analysts suggested the rally could peter out.

"Stocks are likely overdue for some consolidation or even an extended period of modest declines at some point in the year," Anthony Saglimbene at Ameriprise said.

"Without a meaningful shift in the fundamental picture, we suspect investors would welcome such a downdraft and treat the event as a buying opportunity."

The prospect of US interest rates coming down this year has played a role in pushing bitcoin to new record highs, with the cryptocurrency peaking at $72,880.

Moves by US authorities and now regulators in Britain to allow exchange-traded funds (ETFs) for the unit have also provided support, opening it up to new classes of investors.

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