The Chinese equity trends have really been eye-catching over the past weeks and despite US efforts to flare-up the trade war via new tariffs, the trend has just continued.

The new Chinese efforts to prop up the sentiment in the Real Estate space have so far been successful and it seems like an attempt that is a LOT more serious and sizy than what we have seen so far.

We are no longer talking about trial balloons or minor twists. We are talking about the politburo instructing local party members in the regional governments to buy unsold homes from struggling developers and turn them into affordable housing. This is a big step!

The authorities are basically turning a short-term problem into a medium-term problem and markets will likely take comfort in that.

Chart 1: Macro trend is broken to the upside in Hang Seng

While the Real Estate prices continue to slide in China, the industrial production trend is back at least at pre-pandemic levels and the minor soft patch in April didn’t really feed through.