China Could End Price Cap on Unsold Home Purchases

Economic

Summary:

China is considering scrapping a price cap for local governments buying unsold apartments, according to people familiar with the matter, as Beijing seeks to speed up the clearance of millions of empty homes and stem the property downturn.

Under the proposal, local authorities across the country will no longer be subject to a price ceiling equivalent to the cost of affordable homes in the same neighbourhood, the people said, asking not to be identified discussing a private matter.

The move, which has yet to be finalised, may give city and provincial officials greater autonomy in offering competitive prices and ease the financial burden of developers, the people said. For China’s affordable housing, local governments can only sell them to qualified buyers at no more than 5% profit after taking into account land and construction costs.

The Housing Ministry didn’t respond to a request for comment. A Bloomberg gauge of Chinese real estate stocks rose extended gains on Thursday after the report, rising as much as 4.6%.

Chinese Premier Li Qiang on Wednesday vowed to give regional governments more say in how they purchase unsold residential units, after a challenging start for the high-profile initiative. The changes could improve some of the plan’s unattractive economics for both developers and state buyers.

Officials will be given more leeway in setting standards on which unsold homes to purchase and deciding how to use such properties, Li said at the National People’s Congress. Investor expectations of further policy easing has spurred a rally in property shares in recent weeks.

“The news, if true, is positive, as it should help speed up local governments’ implementation of buying unsold units from distressed developers,” Raymond Cheng, the head of China property research at CGS International Securities Hong Kong, wrote in a note. “We expect to see more policies implementation this year, which will help to improve developers’ sales and address their liquidity issue.”

China has been trying to put a floor under the years-long real estate meltdown amid weak domestic demand and a worsening job situation. While the housing sector has picked up modestly on the back of government support, upticks are mostly happening in the resale market, as buyers remain concerned about developers’ ability to finish projects on time.

New apartment prices have tanked in the past three years, though they stabilised in January after a raft of stimulus measures in 2024.

Challenges remain

China was trying to deal with 382 million square metres of excess inventory, equivalent to the size of Detroit, as of July last year.

The latest consideration also comes as Beijing pledged to “effectively prevent debt defaults by real estate companies”, signalling a further shift towards aiding more players in the industry. Previously, it had singled out “quality top developers” for support.

It’s unclear whether the newest proposal will be enough. Last year, a few city governments suggested resorting to heavy bargaining to minimise their risks when buying unsold property, raising doubts on whether distressed developers would be willing to sell their inventory.

The initiative adds stress to local finances that are already on shaky ground. Regional governments’ ability to boost growth has been undermined by a record drop of income from land sales, with their budget spending shrinking in the first seven months last year. Among all 31 provinces and municipalities, only Shanghai recorded a fiscal surplus in the first half in 2024.

The government said on Wednesday it would push forward policies on using special local bonds to fund purchases of idle land and unsold homes.

Source: Theedgemarkets

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Warren Takunda

Economic

As trade tensions simmer and investors contend with Germany ripping up its fiscal rulebook, the European Central Bank is widely expected to cut interest rates again on Thursday but what comes next remains up in the air.

The ECB has cut rates five times since June as inflation retreated and economic growth faltered. But with rates slowly approaching a level that no longer restricts economic growth, one might expect an end to the easing cycle.

That may not be the case here, though, as the spectre of a trade war with the United States looms large. Also clouding the near-term outlook are announcements by Germany and the European Commission on changes to fiscal rules, to allow higher defence and infrastructure spending.

All eyes will be on the ECB when it announces its policy decision at 1315 GMT, followed by ECB President Christine Lagarde's 1345 GMT press conference.

The markets are still digesting Berlin's big bazooka measures announced late on Tuesday, which triggered a steep selloff in German bonds, a surge in the euro to a four-month high and the best day for the DAX index in well over two years.

Futures indicate the DAX is set for a higher open on Thursday while German 10-year Bund futures are down 0.7%, indicating a likely decline in cash bond prices once that market opens.

Germany's 10-year yield , the euro zone's benchmark, climbed more than 30 basis points on Wednesday, its biggest daily rise since the euro was launched in 1999.

Investors' mostly exuberant reaction to the fiscal binge contrasted with investor angst about the tightening purse strings in the United States.

Stocks in Asia on Thursday tracked Wall Street higher as investors held out hope that trade tensions could ease after U.S. President Donald Trump exempted automakers from tariffs for a month.

We just got this morning services index, up not just as expected, but even stronger.

And as my colleague Jamie McGeever notes in his revamped newsletter: As long as Washington's chaotic "on-off, on-off" tariff policy persists, a fog of nervous uncertainty and heightened volatility will hang over the markets.

A line chart of the DAX Index stock index over the last 365 days.

The line chart shows the ECB's deposit policy rate from Jan. 1999 to Feb. 2025, with rate-cutting cycles highlighted.

Key developments that could influence markets on Thursday:

Feb PMI data for euro zone, Germany, France and UK

ECB interest rate decision

Earnings: Reckitt Benckiser, ITV and Merck KGaA

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Stocks

Asian shares were mostly higher Thursday, tracking a rebound on Wall Street after President Donald Trump pulled back on some of his tariffs hikes.

U.S. futures were little changed, while benchmarks surged in Japan and China.

Trump’s decision to give a one-month exemption for U.S. automakers on his 25% tariffs for Mexican and Canadian imports raised hopes he may avoid a worst-case trade war that grinds down economies and sends inflation higher.

Tokyo’s Nikkei 225 index gained 0.8% to 37,704.93. Japanese automakers’ shares surged in U.S. trading, though Toyota Motor Corp.'s shares fell back in Tokyo trading. losing 1%. Honda Motor Corp. gained 2% and Nissan Motor Co. rose 1.1%.

Hong Kong’s Hang Seng index jumped 3.3% to 24,362.68 following Chinese government reports to the annual legislative session that showed a greater resolve by Beijing to boost consumer spending and other domestic demand.

The Shanghai Composite index advanced 1.2% to 3,381.10.

South Korea’s Kospi jumped 0.7% to 2,576.16, while the S&P/ASX 200 in Australia slipped 0.6% to 8,094.70.

Taiwan’s Taiex shed 0.7%, while the SET in Bangkok skidded 0.6%.

On Wednesday, gains for Ford Motor and GM stocks helped lead Wall Street higher.

The S&P 500 rose 1.1% to 5,842.63, while the Dow Jones Industrial Average added 1.3% to 43,006.59. The Nasdaq composite was 1.6% higher, closing up 1.5% at 18,552.73.

Trump said he was granting a one-month exemption for U.S. automakers on his 25% tariffs for Mexican and Canadian imports after talking with Ford, General Motors and Stellantis, which owns Chrysler. That sent relief through Wall Street, and Ford’s and General Motors’ stock both jumped more than 5% to help lead a widespread rally across the market.

The worry has been that such tariffs would not only hurt profits for companies but also jack up prices for cars and other bills for U.S. households that are already struggling with still-high inflation. The hope is that Trump is using the threat of tariffs as a negitating tool and ultimately may institute less painful moves for the economy and global trade if he can win what he wants.

Trump did not roll back all of the tariffs he announced on the United States’ largest trading partners, including on China. He said in an address before Congress Tuesday night that he’s going ahead with additional tariffs on track to go into effect on April 2.

He has upped uncertainty in markets already reeling after he said Monday that there was no more room for negotiations. The higher tariffs effect Tuesday, causing the U.S. stock market to tumble.

Whatever the outcome, just the threat of tariffs has hit U.S. households and businesses, with consumer confidence souring sharply because of expectations they will fuel inflation. With all the changes coming from Washington, U.S. manufacturers say their growth is approaching stall-speed amid worries about tariffs.

Reports Wednesday gave a mixed read on the U.S. economy. A report from ADP suggested U.S. employers pulled back sharply on their hiring last month, a possible warning signal ahead of a more comprehensive jobs report due out Friday from the U.S. Labor Department.

A separate report said growth for U.S. finance, real estate and other businesses in the services sector is better than economists expected. But businesses also said in the survey they’re confronting “chaos” and uncertainty because of tariffs, according to the Institute for Supply Management.

A recent stream of weaker-than-expected reports on the U.S. economy has raised the possibility of a worst-case scenario known as “stagflation.” It’s something that doesn’t happen often, where the economy is stagnating and inflation is high.

The U.S. economy closed out last year running at a solid pace. If it weakens, the Fed can cut its main interest rate to make borrowing easier and goose growth. But rate cuts push inflation higher. It could be boxed in if prices for eggs and other everyday items surge because of tariffs.

In other dealings early Thursday, U.S. benchmark crude oil added 58 cents to $66.89 per barrel, while Brent crude, the international standard, was up 56 cents, to $69.86 per barrel.

The U.S. dollar fell to 148.51 Japanese yen from 148.89 yen. The euro climbed to $1.0803 from $1.0790.

Source: AP

Risk Warnings and Disclaimers

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Alex

Economic

Risk sentiment is mildly positive in Asian session today, as investors digest the latest developments in US trade policy and Chinese economic measures. Markets welcomed the news that the US has granted a one-month exemption for imports from Mexico and Canada for auto makers. The decision came after US President Donald Trump met with executives from Ford, General Motors, and Stellantis, who urged him to delay the levies to avoid disruptions in the industry.

Meanwhile, Hong Kong stocks surged to a three-month high, with optimism fueled by hints from China’s National People’s Congress about looser monetary policies, along with expectations for further stimulus. Adding to the bullish momentum, tech giant Alibaba saw its stock soar after unveiling a new AI model, which it claims is competitive with DeepSeek, a major player in the artificial intelligence race. The rally in Chinese markets is adding to overall risk appetite in Asia, though uncertainties remain around US-China trade tensions.

In the currency markets, Euro continues to lead gains for the week as investors anticipate today’s ECB policy decision. The central bank is widely expected to deliver a 25-basis-point rate cut, but the outlook for further easing is more uncertain than ever. A trade war with the US is adding downside risks to growth, while Europe’s major economies are making historic shifts in fiscal policy, particularly in Germany, where new spending initiatives could support economic expansion. These conflicting factors make it challenging to predict ECB’s path beyond today’s meeting.

ECB President Christine Lagarde’s press conference is unlikely to provide strong forward guidance, as policymakers will want to maintain flexibility amid rising geopolitical and trade uncertainties. However, despite the upcoming rate cut, Euro’s rally looks well-supported in the near term, particularly as markets focus on Europe’s growing fiscal momentum and rearmament plans.

Sterling is the second strongest performer, followed by New Zealand Dollar. In contrast, Dollar remains at the bottom of the performance ladder, looking increasingly vulnerable ahead of tomorrow’s Non-Farm Payrolls report. Canadian Dollar is the second-worst performer of the week and Japanese Yen is also under pressure. Swiss Franc and Australian Dollar are positioned in the middle of the pack.

In Asia, at the time of writing, Nikkei is up 0.82%. Hong Kong HSI is up 3.03%. China Shanghai SSE is up 0.78%. Singapore Strait Times is up 0.72%. Japan 10-year JGB yield is up 0.053 at 1.499, hitting a 16-year high. Overnight, DOW rose 1.14%. S&P 500 rose 1.12%. NASDAQ rose 1.46%. 10-year yield rose 0.055 to 4.265.

ECB to cut rates, but trade war and fiscal shifts cloud outlook

ECB is widely expected to continue its “regular, gradual” easing cycle today, reducing the deposit rate by 25bps to 2.50%. Markets are still pricing in two more cuts this year, but the path forward has become murkier in light of recent geopolitical and economic shifts. Also, interest rates are approaching neutral levels, making further easing a more delicate decision.

On one hand, trade tensions with the US loom large, and the fallout from fresh tariffs and retaliatory measures could weigh on Eurozone’s already fragile economic recovery. On the other hand, the announcement of transformational fiscal changes in both Germany and at the European Commission level—aimed at boosting defense and infrastructure spending—could have a significant long-term impact on growth, partially offsetting the headwinds from a trade war.

ECB’s new economic projections, to be released alongside today’s decision, are expected to show weaker growth and marginally higher inflation. However, data collection for these forecasts took place weeks ago, rendering them less reflective of the rapidly evolving environment. Thus, their usefulness for predicting medium-term policy moves may be limited, with markets keeping an even closer eye on the ECB’s forward guidance instead.

Euro has been exceptionally strong this week, with recent optimism boosted by developments in European fiscal policy. It’s rally is unlikely to be deter by today’s ECB outcome.

Technically, EUR/CHF has surged aggressively, now pressing long-term falling channel resistance (at around 0.9620), after decisively breaking above 55 W EMA. Sustained break above this resistance would suggest that the downtrend from 1.2004 (2018 high) has finally bottomed at 0.9204.

Sustained trading above the channel resistance will be argue that whole down trend from 1.2004 (2018 high) has completed at 0.9204, on bullish convergence condition in W MACD.

In this bullish case, further rise should be seen to 0.9928 structural resistance at least, with prospect of stronger rally, even still as a medium term corrective move.

Fed’s Beige Book: Modest growth, rising price pressures, and tariff concerns

Fed’s Beige Book report indicated that “economic activity rose slightly” since mid-January, with mixed regional performances. While four Districts saw modest or moderate growth, six reported no change, and two experienced slight contractions.

Consumer spending was generally lower, with essential goods seeing steady demand but discretionary spending weakening, particularly among lower-income consumers. However, business expectations remained “slightly optimistic” for the coming months.

On the labor front, employment “nudged slightly higher” overall, though wage growth slowed modestly compared to the previous report.

While price pressures remained moderate, several Districts noted an uptick in the pace of increase, particularly in manufacturing and construction. Many firms struggled to pass higher input costs onto customers, but expectations of tariffs on imports were already prompting preemptive price hikes in some sectors.

On the data front

Swiss unemployment rate, UK PMI construction and Eurozone retail sales will be released in European session. Later in the day, Canada will release trade balance and Ivey PMI. US will publish jobless claims, trade balance, and non-farm productivity.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0662; (P) 1.0729; (R1) 1.0857;

Intraday bias in EUR/USD remains on the upside as current rally from 1.0176 is still in progress. Next target is 161.8% projection of 1.0176 to 1.0531 from 1.0358 at 1.0932 On the downside, below 1.0721 minor support will turn intraday bias neutral and bring consolidations first, before staging another rise.

In the bigger picture, the strong break of 55 W EMA (now at 1.0668) suggests that fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. That came after drawing support from 0.9534 (2022 low) to 1.1274 at 1.0199. Rise from 0.9534 is still intact, and might be ready to resume through 1.1274. This will now be the favored case as long as 1.0531 resistance turned support holds.

Economic Indicators Update

GMT	CCY	EVENTS	ACT	F/C	PP	REV
00:30	AUD	Building Permits M/M Jan	6.30%	-0.10%	0.70%	1.70%
00:30	AUD	Trade Balance (AUD) Jan	5.62B	5.68B	5.09B	4.92B
06:45	CHF	Unemployment Rate Feb		2.70%	2.70%
09:30	GBP	Construction PMI Feb		49.8	48.1
10:00	EUR	Eurozone Retail Sales M/M Jan		0.10%	-0.20%
12:30	USD	Challenger Job Cuts Y/Y Feb			-39.50%
13:15	EUR	ECB Deposit Rate		2.50%	2.75%
13:15	EUR	ECB Main Refinancing Rate		2.65%	2.90%
13:30	CAD	Trade Balance (CAD) Jan		1.4B	0.7B
13:30	USD	Initial Jobless Claims (Feb 28)		236K	242K
13:30	USD	Trade Balance (USD) Jan		-93.1B	-98.4B
13:30	USD	Nonfarm Productivity Q4		1.20%	1.20%
13:30	USD	Unit Labor Costs Q4		3%	3%
13:45	EUR	ECB Press Conference
15:00	USD	Wholesale Inventories Jan F		0.70%	0.70%
15:00	CAD	Ivey PMI Feb		50.6	47.1
15:30	USD	Natural Gas Storage		-96B	-261B

Source: ACTIONFOREX

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Owen Li

Economic

Malaysia is discussing with chip companies based in the country whether they can absorb the impact of potential US tariffs on semiconductors, its trade minister said, as it looks to hedge against risks to its export-driven economy.

The Southeast Asian nation is home to a large semiconductor industry, including top US multinationals such as Intel and GlobalFoundries, and is one of the top exporters of chips to the United States.

US President Donald Trump said in February that he intended to impose tariffs on semiconductors starting at "25% or higher", though it is unclear when this decision could be made.

Malaysia would need to see the magnitude and quantum of the tariffs, Trade Minister Tengku Zafrul Aziz said in an interview with Reuters on Wednesday, as they could have a significant impact on its exports.

"We're discussing with the companies... whether the tariffs will be absorbed by the consumers," Tengku Zafrul said.

"Exports will continue to happen but someone has to pay for the higher cost, whether it be the consumers or the companies that absorbs."

Tengku Zafrul said the government has not discussed what it will do or whether it will provide financial support to offset tariffs.

Last year, Malaysia shipped US$16.2 billion worth of chips to the US, accounting for nearly 20% of all US semiconductor imports, US trade data reviewed by Reuters show.

Resilient data centre growth

Tengku Zafrul also said Malaysian data centres were unlikely to be affected by export restrictions imposed on advanced chips by the previous U.S. administration as demand for artificial intelligence remains strong.

Malaysia is fast becoming a major hub for data centres and AI factories in Southeast Asia, with investments from US technology giants including Microsoft, Google, Amazon and Oracle, mainly in cloud services and data centres.

However, this investment boom may be hampered by new restrictions adopted in the final days of Joe Biden's administration in January on the use of US chips overseas, in a bid to further restrict China's access to AI semiconductors.

It remains unclear how Trump will enforce the new rules but the two administrations share similar views on the competitive threat from China.

Under the new rules, which are set to take effect in May, US cloud service providers, such as Microsoft, Google and Amazon, will be allowed to deploy only 50% of their total AI computing power outside the United States, and no more than 7% in Malaysia and other countries that have not been granted privileged access to US chips.

Tengku Zafrul said Malaysia's data centres will not be impacted given the sector's growth trajectory accounted for the limits of the restrictions.

The sector's prospects will be further boosted by the fact that the big data centre companies in Malaysia are U.S. companies, he added.

"When we talk to the data centre players, Microsoft, Google, AWS ... there is not a concern because the allocation (under the restrictions) is adequate," Tengku Zafrul said.

"There will be no impact on the growth in data centres because AI will be used by many."

Source: Theedgemarkets

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Stocks

London stocks were set to gain at the open on Thursday following positive sessions in the US and Asia, as investors braced for another raft of corporate news.

The FTSE 100 was called to open around 65 points higher.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "US President Donald Trump said that the tariffs that concern the North American car industry will be delayed by a month... a day after he imposed 25% levies on all Mexican and Canadian imports.

"Global markets welcomed Trump’s move to turn a threat into reality and then roll it back - arguably a better outcome than imposing and sticking to 25% tariffs. However, the uncertainty and lack of seriousness in these decisions will undoubtedly have a sizeable impact on US growth.

"In the markets, the car stocks rebounded yesterday on delayed tariffs. The Mexican and Canadian investors were relieved, mood in Europe was significantly better, as well. The Stoxx 600 recovered 0.91% while the DAX jumped 3.38%. Even though the tariffs haven’t reached the European coast of the Atlantic Ocean, the European investors are extremely sensitive to the trade news, and that leads to big sized moves - rising volatility.

"The market conditions are getting appetising for traders that are looking for interesting short-term opportunities, but it’s important to have a clear playbook and determine what factors influence the market moves? Is it the data, is the central bank expectations, is it politics, geopolitics?"

In corporate news, annual profits at recruiter PageGroup slumped in 2024 as economic uncertainty continued to hit client and candidate confidence.

Pre-tax profit for the year to December fell 58% to £49.1m on revenue of £1.73bn, down 13.5%.

Page said the conversion of interviews to accepted offers “remains the most significant area of challenge”, adding that the slow end to 2024 had continued into the first two months of the new year.

Endeavour Mining reported a strong 2024, with record fourth-quarter free cash flow of $268m and full-year production of 1,103,000 ounces at an all-in sustaining cost of $1,218 per ounce.

Adjusted EBITDA jumped to $1.325bn for the year, up from $1.047bn, while net debt was reduced to $732m, bringing the leverage ratio to 0.55x.

Shareholder returns reached $277m, including a record $240m dividend, as the company expanded reserves by 32% to 18.4 million ounces and advanced its Assafou project.

Results were also out from Melrose, ITV, Entain, Informa and Elementis, among others.

Source: Sharecast

Risk Warnings and Disclaimers

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Alex

Economic

Vietnam posted a rare monthly trade deficit in February as imports surged during the month, government data showed on Thursday, though the country's surplus with the United States increased in the opening months of 2025.

The Southeast Asian nation, a regional manufacturing hub, is heavily dependent on export-driven economic growth and faces risks from global trade disputes, including the potential imposition of tariffs by the US.

Vietnam posted a trade deficit of US$1.55 billion (RM6.86 billion) in February, after a US$3.02 billion surplus in January, the General Statistics Office (GSO) said. It was only the third monthly deficit since the start of 2023, as per GSO and London Stock Exchange Group data.

February's exports rose by 25.7% from a year earlier, while imports surged by 40%, primarily due to increased imports of dairy products, automobiles and metal products, the GSO said.

Over the January-February period, the GSO said there was a trade surplus of US$1.47 billion, aligning with figures published by the government on its portal the previous day.

Combining data for the two months can smooth out distortions from the timing of Lunar New Year holidays, which fell in January this year and February last year.

The GSO data showed that for the January-February period, exports rose by an annual 8.4%, and imports were up by 15.9%.

US surplus, China deficit

In the first two months of 2025, Vietnam's trade surplus with the US reached US$17 billion, up 16.3% from a year earlier, while its deficit with China widened by 36.9% to US$15.4 billion.

Vietnam is worried about being hit with reciprocal tariffs by the US government. The US is Vietnam's largest export market, while China is its biggest source of imports.

Vietnam has long been suspected of being a transshipment hub for Chinese goods to the US, given the huge volumes of intermediate goods it imports from China.

Other data released by the GSO showed industrial production rose by 17.2% in February from a year earlier, picking up from January's 0.6% growth, and retail sales rose 9.4%.

Foreign investment inflows rose 5.4% in the January-February period from a year earlier to about US$3 billion, and foreign investment pledges rose by an annual 35.5% to US$6.9 billion.