A third year into an unprecedented housing downturn, China’s President Xi Jinping seems to be finally getting worried, prompting speculation of quantitative easing and fueling a bull run in Hong Kong-listed Chinese stocks.
A recent readout from the Politburo meeting, released at the end of last month, explained investors’ excitement. The country’s 24 most powerful men (yes, all men) appeared open to taking a different approach to resolving the property crisis, calling for coordinated measures to digest existing housing stock.
The last time the Politburo mentioned the real estate inventory issues was in mid-2016. A massive stimulus in the form of slum redevelopments ensued, with the People’s Bank of China unleashing more than 3 trillion Chinese yuan ($416 billion) in pledged lending in support. That initiative pulled China’s property and stock markets out of a slump. Since Beijing has been floating the idea of urban village renovation lately, Xi is essentially opening the door to his second bazooka.