An unprecedented crisis has arisen these days in front of China, the world’s second largest economy. The crisis in the real estate sector is not showing any signs of stopping. This property crisis has now started scaring China’s stock markets as well. Market investors are afraid that the worst stage of the property crisis has not yet emerged.
The condition of the economy has become like this
Property crisis in China. Has played the biggest role in slowing down the economy. The situation has become such that even 5 percent growth rate this year seems to be a very difficult target for the economy which has been growing at 10 percent or more rate for decades. Due to the crisis, foreign investors have recently made huge sales from the Chinese stock market.
This is being considered as the biggest crisis
China’s stock market is currently the second largest in the world. There is a big stock market. According to a survey by Bloomberg News, the biggest problem facing China’s stock market right now is real estate. Opinion of 15 analysts and money managers has been taken in the survey. 9 of them are from Hong Kong and China. Most analysts are considering the housing sector as the biggest challenge during the last quarter of 2023. Geopolitical tension is being said to be the second biggest challenge.
The problem did not appear suddenly
The problem in China’s real estate sector did not appear suddenly. Analysts believe that the problem started long ago, but its visible effects started becoming visible after two-three years and now they have gone out of control. Demand in the housing sector is quite weak. There is lack of liquidity in the market. The market was expecting aggressive relief measures from the government, but there is no indication from the government in this regard. In such a situation, the fear of deepening of the crisis has become strong.
The situation has become so serious
The sentiment regarding property related shares is currently at its lowest level in 12 years. The real estate sector is struggling with the problem of over supply amidst low demand. China’s population is 1.4 billion, while there are enough houses ready in the market to meet the needs of 3 billion people. Uncertainty continues regarding the Evergrande Group, which is at the center of the entire crisis. Another big real estate company in China, Country Garden Holdings, is trying hard to avoid public bond default. Overall, the situation does not seem to be good at the moment.
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