China’s hottest real estate market freezes over as February home sales plunge 80 per cent amid a dearth of transactions during coronavirus outbreak
Shenzhen, mainland China’s hottest property market last year, has seen an 80 per cent decline in home sales amid the coronavirus epidemic, Hong Kong brokerage Midland Realty said.
The technology hub reported 1,667 sales of lived-in homes last month, down from 7,499 units and 10,000 units sold in January and December, respectively, the brokerage’s research unit said.
The city, often referred to as “China’s Silicon Valley”, reported a boom in home sales after being earmarked by Beijing in August last year as a new special economic zone where wide-ranging reforms would be carried out. The total number of transactions rose by 30 per cent between August and December, as buyers and investors bid big on its future prospects.
“We expected that the policies favouring Shenzhen would lead to robust sales until April this year. But this has stopped abruptly because of the coronavirus [outbreak], and it is hard to see when the market will bottom out,” said Fion He, director of Midland Realty’s research unit.
Developers have had to shut their sales centres since January. And market observers said they did not foresee the buzz generated by the property market in Shenzhen – as well as in the other eight mainland Chinese cities included in Beijing’s Greater Bay Area development plan – being replicated when a countrywide lockdown eventually lifts.
Bargain-hunting lifts stocks, but index stays below 5,000
The bludgeoned local stock market found some relief on Friday, but the bargain-hunting was not strong enough to keep the main index above the 5,000 mark.
The main-share Philippine Stock Exchange index (PSEi) recouped 155.34 points or 3.36 percent to close at 4,778.76, tracking the rebound across the United States and regional markets.
“While there are a ton of oversold names in the index at these levels, these might only be short-term trading opportunities as we still take a sell on strength stance and encourage to lighten on any potential rallies we might see—anticipating a further escalation of corona (COVID-19) cases here in the country,” the brokerage said.
For the week—which was disrupted by a two-day shutdown in relation to the Luzon-wide quarantine imposed by the government to combat the COVID-19 pandemic—the PSEi lost a total of 1,015.18 points or 17.5 percent, allowing the bears to cement their control of the market.
The biggest blow came on Thursday, during which the index crashed by 13.34 percent, wiping out P1.16 trillion worth of market capitalization in a single day.
On Friday, the rebound was led by the financial counter, which rose by 6.67 percent, while the holding firm index added 3.75 percent.
A fresh 50-basis-point interest rate cut by the Bangko Sentral ng Pilipinas (BSP) did not come as a surprise to the market, Papa Securities said.
Given the circumstances, the 50-basis-point rate cut appears to be the appropriate response from monetary authorities, said BPI lead economist Emilio Neri Jr.
“More importantly, this has to be complemented by a massive fiscal stimulus that will target key sectors and industries including health, travel, tourism but most specially the families that depend on daily wages. Most banks may need increased access to the BSP’s rediscounting facility, and, in turn, keep credit lines open for their clients,” Neri said.
The property counter also went up by 2.48 percent, while the services counter rose by 1.07 percent. The industrial and mining/oil counters slightly gained.
Value turnover for the day amounted to P6.66 billion. There was net foreign selling of P654.7 million.
There were 117 advancers that outnumbered 85 decliners, while 30 stocks were unchanged.
Investors picked up shares of property giant Ayala Land Inc. and BDO Unibank, which both surged by over 14percent.
Jollibee and LTG both rebounded by over 9 percent while SM Investments, the day’s most actively traded company, rose by 8.17 percent.
ICTSI added 6.29 percent, while Ayala Corp. advanced by 4.06 percent.
First Gen and Metro Pacific both rose by over 3 percent.
On the other hand, PLDT lost 6.87 percent while Megaworld fell by 5.43 percent.
Globe Telecom and Meralco both lost nearly 5 percent, while SM Prime and JG Summit declined by 3.7 percent and 2.47 percent, respectively.
Firms defer debt issues due to COVID-19
The financial market bloodbath arising from the COVID-19 pandemic has prompted some of the country’s top corporations to defer big-ticket fund-raising plans.
Conglomerate San Miguel Corp. announced on Friday the deferment of its application with the Securities and Exchange Commission (SEC) to raise P60 billion from an offering of commercial paper, or debt securities with maturity of up to a year.
The country’s leading lender, BDO Unibank, also deferred a P5-billion bond offering.
For SMC, the deferment will be “until such time that conditions stabilize, taking into consideration the COVID-19 outbreak and following the adoption by the Philippine government of enhanced community quarantine and stringent distancing measures over the entire island of Luzon,” SMC said.
The monthlong lockdown of Luzon, which accounts for 73 percent of the Philippine economy, will take effect until April 12.
No application formsAsked whether more corporate fund-raising plans will likely be deferred, BDO Capital president Eduardo Francisco said in a text message on Friday: “They will try not to but some may inadvertently [do] so because investors can not get the application forms and issue checks if they are at home.“It’s harder for us to conduct investor briefing for a new deal also if people are not working in their offices and we can’t convene large meetings,” Francisco said.
During the Luzon-wide lockdown, the government prohibits mass gatherings and limits the movement of people. Only private establishments offering basic goods are allowed to operate.
SMC, which was planning to use the proceeds to redeem outstanding preferred shares, submitted its application for the commercial paper offering on Feb. 6, 2020.“Accordingly, we respectfully request the SEC to hold off on further action in connection with the registration statement of the company,” SMC said, adding that it would waive the 45-day review period for the issuance.
Bloodbath worsens as stock market reopen.
Local stocks yesterday succumbed to the worst bloodbath in the Philippine bourse’s history as COVID-19-weary investors hoarded cash after a two-day market shutdown, making corporate Philippines poorer by P1.16 trillion in a single day.
The main-share Philippine Stock Exchange index (PSEi) crashed by as much as 1,296.22, or 24 percent, in early trade to fall below the 5,000 barrier, before trimming losses at close. The selling frenzy slashed 711.95 points, or 13.34 percent, to bring the local stock barometer to an eight-year low of 4,623.42. The local bourse became the worst performer in the region for the day.
“What we saw today is historic and unprecedented with wild intraday swings of more than 700 points. Market disruptions, despite good intentions, have their consequences. In our case, it was another circuit breaker-induced halt at the resumption of trading,” said Jose Vistan, head of research at local stock brokerage AB Capital Securities Inc. “The COVID-19 scare continues to be the main catalyst that’s driving market volatility. COVID-19 brings both certainty and uncertainties. What is certain is it has affected the economy in every way possible. What is uncertain is when this pandemic will end,” Vistan added.
“After two days of no trading, the main index opened much lower as investors rushed to sell, triggering a circuit breaker in the first few minutes of trading,” said Christopher Mangun, head of research at AAA Equities.
Bargain hunters picked up stocks at the day’s low, allowing the PSEi to reduce its losses but Mangun noted that despite equities becoming undervalued, investors were still in a state of panic and confusion.
“This sell-off will continue until we see some improvement on the containment of the COVID-19 virus on our shores,” Mangun said.
At the closing level of 4,623.42, the PSEi has hit its lowest level since January 26, 2012. Since the start of this year, the index has given up 40.84 percent. It has now fallen by 49 percent from its all-time high finish of 9,058.62 on January 29, 2018.
“Investor sentiment remains on risk-off and remains fragile as global financial markets fall due to the virus pandemic. Monetary stimulus is not pacifying the markets. Also, the rising cases locally add to the worries. We need more fiscal action to counter the virus impact. How do you spark confidence when there are rising cases?” said BDO Unibank chief strategist Jonathan Ravelas.
As the market struggles to find the bottom, Ravelas said the next support levels should be at around 4,150 and 4,000.
The P1.16 trillion worth of fortune that disappeared from the stock market on Thursday was equivalent to about 6 percent of the country’s gross domestic product.
The most battered was the mining/oil counter, which slid by 17.74 percent. The financial counter lost 15.38 percent while the industrial and holding firm subindices lost over 13 percent.
The property counter fell by 12.51 percent, while the services counter slumped by 11.61 percent.
Value turnover for the day amounted to P9.42 billion. There was heavy net foreign selling amounting to P2.4 billion.
There were 211 decliners versus only eight advancers, while 21 stocks were unchanged.
The worst-hit among blue chips is Jollibee, which lost nearly a quarter of its value, while BDO Unibank, Ayala Corp. and Bloomberry all dived by over 22 percent.
Property giant Ayala Land lost 20.3 percent while Megaworld tumbled by nearly 18 percent. ICTSI declined by 15.88 percent.
Meralco and Metro Pacific both plummeted by over 13 percent while JG Summit lost 12 percent. Metrobank fell by 10.34 percent.
The day’s most actively traded company was SM Investments, which fell by over 9 percent, along with Globe Telecom and Aboitiz Equity Ventures.