Weekly Economic Observation: How to Understand the Changes of Real Estate Policies

Data in April showed that supply expansion dominated the recovery of the economy, while domestic demand remained weak. This also makes the nominal growth of the economy continue to be lower than the actual growth, and corporate profits are under pressure. This pattern may continue in the second quarter.

    Recently, the government began to try to purchase commercial housing and land, which will help to provide liquidity for real estate enterprises, improve the financing environment for real estate enterprises, and avoid further crowding. However, considering the downward inertia of the real estate industry and the details of policy operation to be clarified, the stability of the real estate industry needs a long time to observe.

    In the face of the adjustment of real estate policy, the bond market is more passive than the equity market. This difference stems from the fact that the equity market is more based on expected pricing, while the bond market is more concerned about the possibility and effect of reality. In the process of policy promotion, the difference between expectation and reality may amplify the volatility of the equity market.

    Risk tips: (1) geopolitical risks (2) policy introduction beyond expectations