China's big news/Container prices jump again/Walmart comments

Chinese property stocks continue to rally as there was an official announcement of what was speculated yesterday that local governments were going to start buying some of the unsold residential real estate developer apartment inventory, partly financed by PBOC lending. Not only that, the PBOC also lowered the downpayment requirements for first and second homes nationwide to 15% and 25% respectively from 20% and 30%. After a few years into this property bubble unwind and distress for many builders, the Chinese authorities are now ripping the band aid off and these steps should go a long way in both stabilizing this very important industry for them and giving a lift to other parts of the economy, especially consumer spending. That is because there is so much wealth tied up in property and that has taken a mark to market hit with the drop in home prices. 

The Hang Seng property index jumped another 2.5% overnight and the Mainland properties index was higher by 5.3% after rising by 4.9% yesterday. We remain bullish and long some stocks in Hong Kong where the Hang Seng is now up 14.7% year to date. 

China also reported some mixed April data overnight with retail sales softer than expected but industrial production surprising to the upside. Home prices continued to fall in April but the steps mentioned above should stem this.

I mentioned yesterday the comments from Hapag Lloyd that they've seen a lift in volumes but couldn't put their finger on exactly why and what Maersk said last week that the Houthi's are widening their area of attack. In response to both, container shipping prices jumped again for the week ended 5/16. The Shanghai to Rotterdam route price rose $463 after jumping by $606 last week. At $4,172 for a 40 ft container, it compares with $1,667 at the beginning of the year. The ride from Shanghai to LA saw a similar bump and at $4,476 that journey price is vs $2,100 at year end '23.