Dim Sum Express

Property: Transactions down in HPR cities as expected; sector fundamentals to deteriorate at quickening pace

    Property transactions in HPR cities came down in Oct as expected, while transactions in non-HPR cities slightly exceeded expectations. However, we do not think the strength in non-HPR cities is sustainable, as past experience suggests that the spill-over of housing demand to lower-tier cities during policy tightening in higher-tier cities is limited. In fact, with further implementation of policy tightening, we believe overall market sentiment will move towards a wait-and-see stance, with both HPR and non-HPR cities to see transaction declines and sector fundamentals to deteriorate at a quickening pace.

    Steel: Exports likely to decline further in Nov

    We expect steel exports to come down further in MoM terms in Nov. Some downward pressure on domestic steel demand might be seen in Nov as the low season arrives, and we expect iron ore output and imports to decline somewhat this month. Meanwhile, crude steel output is likely to remain high for some time. Raw material costs and liquidity conditions, rather than steel demand, are currently the main drivers of steel prices. Most steel companies are now operating around breakeven, with some already forced to raise product prices.