JPMorgan sees China property stabilising, boosting outlook for equities.
JPMorgan says China’s property market may be nearing a turning point, with stabilising prices and rising demand supporting the outlook for Chinese equities to outperform emerging markets.
Summary:
- JPMorgan sees China property market nearing turning point
- Stabilisation could support Chinese equity outperformance
- New-home price declines slowing in March
- Used-home prices rise in 13 cities
- Hong Kong property recovery aiding sentiment
- Equity gains feeding delayed wealth effect
- Early signs, but recovery still tentative
JPMorgan believes China’s property sector may be approaching a turning point, a shift that could provide a meaningful tailwind for Chinese equities and support outperformance relative to broader emerging markets.
The bank points to early signs of stabilisation in housing data, alongside improving sentiment linked to gains in equity markets and a recovery in Hong Kong real estate. Together, these factors are beginning to feed through into a gradual revival in housing demand after a prolonged downturn.
China’s property market has endured a multi-year correction, weighing heavily on growth, household confidence and financial conditions. However, recent data suggests that the pace of decline is moderating. New-home prices continued to fall in March, but at a slower rate, while prices in the secondary market rose across 13 cities—an encouraging signal that conditions may be starting to stabilise at the margin.
JPMorgan highlights the role of spillover effects from Hong Kong’s property rebound, which appears to be improving sentiment more broadly across the region. In addition, rising Chinese equity markets are beginning to generate a delayed “wealth effect,” supporting consumer confidence and gradually feeding back into housing demand.
While the recovery remains tentative, the bank argues that the direction of travel is becoming more constructive. A stabilising property sector could ease one of the key structural drags on the Chinese economy, helping to improve the broader macro outlook.
From a market perspective, this shift has important implications. JPMorgan sees scope for Chinese equities to outperform emerging market peers if the property downturn continues to bottom out. The stabilisation of housing activity could reinforce earnings expectations, improve investor sentiment and support capital inflows into Chinese assets.
That said, the bank’s view rests on early-stage indicators rather than a full recovery, suggesting that confirmation through sustained improvement in data will be critical. For now, the call reflects a growing belief that the worst of China’s property slump may be passing, with potential upside for equities if the trend holds.
Might not be able to use this much any more.
This article was written by Eamonn Sheridan at investinglive.com.