China Stocks Down, but Hong Kong Housing Market Holding Strong

Led by quick declines in Chinese stocks on the heels of concern of US-China trade relations, the Asian markets lost steam early on Monday. The fall also comes at a time when tech stocks certainty is low, as well.  Overall, the Shanghai Composite score (SHCOMP) finished 2.2 percent on the day; the smaller Shenzhen Composite also showed a drop of 1 percent.

On the other hand, Hong Kong stocks appears to have recovered, a little, after the global selloff that closed the previous week, with benchmark Index Hang Seng (HSI) improved slightly:  just 0.38 percent.  Though Chinese property developer Sino Land was down 2.4 percent, China Resources Land finished the day up 1.1 percent.

It is important to look at Hong Kong’s present housing market since new home sales have cooled off a bit. That is a sign of weakness in a major market, which might also be at risk for a big correction.  Looking a little closer, the transaction value of October’s Hong Kong market is $11.2 (in HK, the equivalent of about $1.98 billion, USD). This is actually the lowest level this index has reached in the last 16 months, not including holiday distortions, of course.  Also, transaction numbers remained at 1,130, which is down nearly 50 percent from the same metric last month!

It is also crucial to observe that these are the first numbers Hong Kong banks to release on home sales since they have stopped ultra-low borrowing costs, last months, and raised best lending rates.  Of course, buyers are also taking a step back in light of these higher prices, concerned over economic [in]stability.

According to CLSA regional head of property research, Nicole Wong, “The developers tried the tactics of pricing it low, it has worked for a while but no longer working.  Buyers now have to rethink that the cheaper prices are not cheap at all.”

At the end of the day, though, Hong Kong placed 11thon a list ranking economic strength.  More importantly, though, they jumped up seven places to reach 6thin terms of sustainable competitiveness.  The top five global cities are New York, Tokyo, London, Singapore, and Los Angeles.

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