It's interesting, though, just that the how the narrative has shifted here when
it comes the property market, given the sixteen point plan.
Does your outlook change in any way, given what we've seen so far?
Yes. Thanks for the question.
We have maintained a negative outlook for China's property sector, which
reflects our expectation that property sales will decline by around 10 to 15
percent in 2023. And also the funding condition we will
back to remain high for financially developments.
Although the NIKKEI all fall 10 to 15 percent.
Now, moving from the 28 percent decline that we have seen in the first 10 months
of this year and the 10 to 15 percent decline forecast reaming on the high
side and about 60 new measures. We expect that support from developers
to funding and improve liquidity, but it would take time to take effect.
Right. And it doesn't cave in, David, here.
By the way, it does seem this is more really to help the developers themselves
than really create demand. So I want to ask you about what
inventory looks like of empty apartments next year.
That's one part of the question. And also where you think sales will be
as far as the property market is concerned for next year to.
Yes, in terms of sales, we expect that it
really may or the weak side. We expect a 10 to 15 to percent of the
sky. Year on year compared to this year in
total. Once you've found an inventory level, we
will expect that most of the city will remain largely stable
because we coming supply also contact policy finally becoming famous.
But having said that, we also see that the inventory level in low tier cities
elevated more. Given that the sales situation, you
know, they're pretty much weaker and cold up there because economic
fundamentals. Now caving in.
Look below the hood, if you will. Know liquidity is of concern.
On top of that, we've seen deterioration in quality that but not markedly as much
as people had thought. How are you seeing all this?
Because there's also another aspect to the human aspect, too, which is the once
bitten, twice shy. With regards to to give us a sense of
how your rating these companies. Yeah, the kitchen situation for many of
the Chinese developers has been under pressure recently, last year, and many
of them may have some liquidity pressure at this
moment considering DAX sales have been declining and definitely cash flow
generation has to recover. And the same time, many of them are
refinancing. Actually, although the pressure that
equity people are efficient and but the latest measure that the government and
Rio is getting to support these people, a lot of financing.
Note that some of them could be able to issue a bearing with the government's
support. And also they some of them could cut
bank or chuck companies to extend to financing for one year if they're having
some notes due to be in the next six months.
And anyway, some of these developers liquidity, pressure and fulfill our
advantage to open the liquidity assets. Money is important.
I just said. And but other than that, we also are
looking at the fundamentals of the companies, including the operation fails
the our nation proficient. So maybe help us separate parliament,
but who's likely to come out of this better and who might have to be, you
know, caught in this sort of consolidation in the industry as well,
how do you separate the winners and losers?
And is there more room for credit differentiation?
Yes, certainly in this a very challenging or pretty fair amount, but
we have seen increasing degree of credit differentiation and although industry
consolidation, developers with government backlog and all have a very
strong financial position that we have seen, they actually performed better in
terms of scale and also in terms of their actual funding over the past year
or so. And these lock development, we will
continue to put them so we can one and they will gain market share from those
countries as well. And therefore, the difficulty is that we
consolidate in this sector in the next year or in the
future. OK.
Yesterday we were talking yesterday, on the day before we were speaking with
UBS. They're head of equity research for
financials and essentially me and talked about how the role of the banks in
providing the financing here. How are you?
I don't ask calculating, but how do you discount the ability of banks to provide
financing for these unfinished projects? And until we bonds are supportive on
the. How do you determine which of these
projects actually get that banking financing,
unfortunately. And those covering the banking sector
may not be able to comment too much on the bank from the bank to protect here.
But going back to the China property sector, we do see those banks have been
providing some financing of trusted developers to complete their unfinished
projects. Some progress has been seen, but due to
the scale compared to the old situation, remain quite small.
And what we also understand is that those financial institutions will also
have their commercial consideration. We are extending law to develop the
asset quality and ability of the getting that money back up to lending could
conducted, conducted about.