China’s once-thriving property market is in the midst of a severe downturn, with property stocks plummeting approximately 65% from their previous highs, now mirroring levels last seen in 2008. The last year alone has witnessed a staggering 25% drop in sales of Chinese property stocks, surpassing the dismal performance of 2008 when sales fell by around 20%.
This alarming freefall is not limited to stocks; China has taken drastic measures to mitigate the crisis. The nation recently implemented a significant interest rate cut on a massive $5.6 trillion worth of mortgages, reflecting the severity of the challenges faced by the real estate sector. With the high-yield real estate index down more than 80%, it’s evident that the Chinese property market is navigating territory beyond a mere recession.
Adding to the economic woes, China has experienced a historic decline in foreign direct investment (FDI). In Q3 2023, foreign direct investment into China fell for the first time ever, underscoring the profound impact the property market crisis is having on the broader economy. This unprecedented development raises concerns about China’s economic resilience and its ability to attract international capital.
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JUST IN: Chinese property stocks are now down ~65% from their highs and back to 2008 levels.
Over the last year, sales of Chinese property stocks are down almost 25%.
To put this in perspective, this is worse than 2008 when sales fell by ~20%.
China also cut interest rates on… pic.twitter.com/FOVeAHtexQ
— The Kobeissi Letter (@KobeissiLetter) December 10, 2023
Foreign direct investment into China fell for the first time ever in Q3 2023 👀 pic.twitter.com/VvRui9G85C
— Markets & Mayhem (@Mayhem4Markets) December 9, 2023