As the housing market slows in China, Beijing could ease its regulatory controls, potentially bolstering a China real estate exchange traded fund.
Citigroup (NYSE: C) expects “targeted easing” on home purchase restrictions, Bank of America (BAC) believes smaller cities could see looser rules and Centaline Group, the parent of China’s largest real-estate brokerage, anticipates some cities to adjust policies, Bloomberg reports.
Property sales in the first quarter declined 5.2% year-over-year and unsold completed properties rose 23% year-over-year, according to the National Bureau of Statistics.
“Relevant departments will closely follow the changes in the property market and improve property macro-control policies accordingly,” Sheng Laiyun, a spokesman for the statistics bureau, said, answering questions on whether policies will be relaxed.
Analysts are speculating on looser policies after a 25% plunge in new construction, along with unsold inventory, weighed on China’s economic growth over the first quarter. [A China ETF for the Long Haul]
“The housing sector now poses the biggest downside risk to the Chinese economy,” Yao Wei, China economist at Societe Generale SA, said in the article. “The next batch of policy announcements is likely to be housing policy relaxation at the local government level.”
Investors can gain exposure to China’s real estate market through the Guggenheim China Real Estate ETF (TAO) , which tracks publicly traded companies and real estate investment trusts that derive the majority of their revenue from properties in China and Hong Kong. TAO has increased 10.2% over the past month and is now testing its 200-day simple moving average.
Guggenheim China Real Estate ETF
For more information on China, visit our China category.
- Real Estate