If commodity prices are anything to go by, sentiment is improving in China. The benchmark December iron ore futures contract on the Singapore Exchange is up 10% this month at $133.45 a ton on hopes Beijing will kickstart the property sector.
The rebound in property developer stocks is spectacular too. Country Garden (2007.HK) is yet to unveil its restructuring plan but its Hong Kong shares are up more than 60% this month. Even Evergrande (3333.HK), which faces a crunch winding-up hearing in the Asian hub on Dec. 4, climbed over 10% during the same period. Ongoing uncertainty around the debt rejigs point to volatility ahead, however.
The optimism on iron ore could further grow if Beijing rolls out more structural reforms, such as the provision of social housing. China’s demand for steel in electric vehicles and green infrastructure has already kept average prices high despite the property slump. Commodity prices and not private company prices may offer the best clue of what lies ahead. (By Chan Ka Sing)
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