Two global credit ratings firms lowered their forecasts for China’s property market, as an accelerating slump in home prices hampers the country’s efforts to rescue the sector.
S&P Global Ratings now expects residential sales to drop 15 percent this year, more than the 5 percent decline it projected earlier. That would put sales below 10 trillion yuan (US$1.4 trillion), about half the peak in 2021, the ratings company said on Thursday.
Fitch Ratings on Wednesday cut its annual sales estimate to a decrease of 15 to 20 percent, worse than an earlier estimate of a 5 to 10 percent drop.
Photo: AFP
The ratings firms’ bleaker outlook suggests they have little confidence that recent stimulus measures would end the property slump that has been dragging the world’s second-largest economy.
The institutions blame a bigger-than-expected drop in home prices, which deters buyers.
Values of new homes fell the most in almost a decade last month, while used-home prices had the sharpest decline in at least 13 years, official figures showed last week.
Real estate accounts for about 78 percent of household wealth in China — double the US rate — and families typically save for years, and borrow from friends and relatives to purchase a home.
Separately, a measure of foreign direct investment (FDI) in China declined for the 12th straight month, underscoring Beijing’s struggle to improve its appeal to overseas investors to boost growth.
Inbound FDI in China dropped 28.2 percent in the first five months of this year from the same period last year to 412.51 billion yuan (US$56.8 billion), data released by the Chinese Ministry of Commerce on Friday showed. The figure was worse than the 27.9 percent drop in April and extended a streak since June last year.
The ministry said FDI fell in January-to-May mainly because of a high comparison base and reiterated authorities have increased efforts to attract foreign investment since the beginning of the year.
EXPANSION: The investment came as ASE in July told investors it would accelerate capacity growth to mitigate supply issues, and would boost spending by 16 percent ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip assembly and testing service provider, yesterday said it is investing NT$17.6 billion (US$578.6 million) to build a new advanced chip packaging facility in Kaohsiung to cope with fast-growing demand from artificial intelligence (AI), high-performance-computing (HPC) and automotive applications. The new fab, called K18B, is to commence operation in the first quarter of 2028, offering chip-on-wafer-on-substrate (CoWoS) chip packaging and final testing services, ASE said in a statement. The fab is to create 2,000 new jobs upon its completion, ASE said. A wide spectrum of system-level chip packaging technologies would be available at
Taiwan’s foreign exchange reserves hit a record high at the end of last month, surpassing the US$600 billion mark for the first time, the central bank said yesterday. Last month, the country’s foreign exchange reserves rose US$5.51 billion from a month earlier to reach US$602.94 billion due to an increase in returns from the central bank’s portfolio management, the movement of other foreign currencies in the portfolio against the US dollar and the bank’s efforts to smooth the volatility of the New Taiwan dollar. Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民)said a rate cut cycle launched by the US Federal Reserve
HEAVYWEIGHT: The TAIEX ended up 382.67 points, with about 280 of those points contributed by TSMC shares alone, which rose 2.56 percent to close at NT$1,400 Shares in Taiwan broke records at the end of yesterday’s session after contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) hit a fresh closing-high amid enthusiasm toward artificial intelligence (AI) development, dealers said. The TAIEX ended up 382.67 points, or 1.45 percent, at the day’s high of 26,761.06. Turnover totaled NT$463.09 billion (US$15.22 billion). “The local main board has repeatedly hit new closing highs in the past few sessions as investors continued to embrace high hopes about AI applications, taking cues from a strong showing in shares of US-based AI chip designer Nvidia Corp,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su
Nvidia Corp’s major server production partner Hon Hai Precision Industry Co (鴻海精密) reported 10.99 percent year-on-year growth in quarterly sales, signaling healthy demand for artificial intelligence (AI) infrastructure. Revenue totaled NT$2.06 trillion (US$67.72 billion) in the last quarter, in line with analysts’ projections, a company statement said. On a quarterly basis, revenue was up 14.47 percent. Hon Hai’s businesses cover four primary product segments: cloud and networking, smart consumer electronics, computing, and components and other products. Last quarter, “cloud and networking products delivered strong growth, components and other products demonstrated significant growth, while smart consumer electronics and computing products slightly declined,” compared with the