China's Improving Consumer Spending was Contrasted by the Weakening Property Sector In May

Li Chen
17 Jun, 2024
Hong Kong

Benchmark indexes in Shanghai and Hong Kong attempted to rebound after consumer spending rose in May, but the weaker-than-expected growth in fixed-investment key investors on edge. 

Retail sales in May rose 3.7% from a year ago, accelerating from 2.3% in April. Industrial production growth slowed to 5.6% from 6.7%, the National Bureau of Statistics reported Monday. 

The increase in retail sales was supported by the spending during the five-day holiday period, during which tourism revenue rose 12.3% to 166.9 billion yuan, or $23 billion, and surpassed the 2019 level of spending by 13.5%. 

Fixed-asset investment growth slowed to 4.0% in the first five months of May as high-tech manufacturing and services expanded by 11.5%, offsetting the 10.1% decrease in property investment. 

Residential property developers are experiencing falling demand; the floor space of new homes sold plunged by 20.3% in the first five months to May from a year ago, and the total sales value of new homes plunged by 27.9%, respectively. 

“We must acknowledge that it will take some time for the effects of policy measures to be shown and that the real estate market is still in the process of adjustment,” NBS spokeswoman Liu Aihua commented in a press conference on Monday after the release of the data. 

New home prices declined by 3.9% in May, accelerating from the 3.1% decrease in April, the government report highlighted. 

New home prices declined for the eleventh month in a row and fell at the fastest pace since June 2015, despite property market stimulus announced by regional governments. 

Prices declined in Guangzhou to 8.3% from 6.9% in the previous month, in Beijing to 1.8% from 0.5%, but in Shanghai prices advanced at a faster pace of 4.5% compared to 4.2%. 

A separate report by the statistical agency showed that the urban jobless rate held steady in May at 5.0%, matching the rate in the previous month. 

The People's Bank of China held its one-year medium-term lending rate at 2.5%. 

 

China Movers 

The CSI 300 index decreased 0.2% to 3,534.45, and the Hang Seng index inched higher by 0.4% to 17,978.30. 

Market sentiment was positive in the early morning after consumer spending growth accelerated, but indexes turned lower in the afternoon amid rising trade tensions with the European Union. 

The noodle maker Tingyi Holding Corp. increased 4.2% to HK$9.70, and China Mengniu advanced 2.3% to HK$13.06 on the back of improving retail sales. 

China Vanke decreased 3.4% to HK$5.12, Longfor Group Holding fell 2.4% to HK$12.08, and China Resources Land edged up 0.1% to HK$27.05.