Sell-Side Updates Post China's Politburo Meeting

Nomura and Goldman Sachs give updated views post the recent Politburo meeting. Nomura notes potential progress on the housing front, while also noting policy stimulus efforts.

Nomura: "The Politburo of the CCP, China’s ruling party, has just wrapped up its quarterly meeting. In the released memo, the Politburo highlighted the task of ensuing the delivery of pre-sold homes, but omitted the so-called “three major projects” including public housing. This major shift fully echoes our call made in November 2023. Although the Politburo still urges local governments, developers, and financial institutions to complete their delayed residential projects, we believe the shift from public housing to pre-sold home delivery marks a significant step towards cleaning up the big mess. The Politburo called for better handling of housing inventory, and we interpret this as combining its public housing mandate with the completion of unfinished residential projects. Other than housing, the memo touched on many issues. We in particular note that the policy rate and RRR changes are on the table, and on the fiscal front, the Politburo called for speeding up the issuance and using the bond quota this year. And last but certainly not least, the long-awaited third Plenum will be held in July."

Goldman Sachs: "President Xi chaired the April Politburo meeting today (30 April) and policymakers set the policy tone for the remainder of this year. Compared to the "Two Sessions" in March and the Central Economic Work Conference last December, policymakers appeared less concerned about near-term growth but maintained their supportive policy stance given several long-term structural challenges. The Politburo focused more on the implementation of planned easing measures and called for more policy support for the delivery of pre-sold new homes, local government debt resolution, high-tech manufacturing, green industries, and market reforms. The broad guidance for the property sector remained largely intact, although the Politburo pledged to “study how to digest the existing housing inventory”. In addition, the Politburo announced the 3rd Plenum of CCP Central Committee will be held in July."