China property prices to lead markets

The last day of the trading week will be capped by one of the most keenly watched gauges of the Chinese economy.

China flag
Source: Bloomberg

The housing price index is scheduled to be released at 930am (SGT), where investors will be watching out to see if there are any further signs of the sector stabilising.

This is a key indicator for the  economy, as rising prices usually encourages new construction, and therefore, growth for the country. It also accounts for many other sectors.

We’ve seen the pace of price growth slowing down from 9.9% at the start of the year, to the latest reading of 0.5% for August. Those looking for a positive boost to markets will be hoping the September reading will hover closer to the August figure, or at least not fall into negative territory.

It has been a rather choppy week which started with a bit of a selloff as concerns over a global growth slowdown and Ebola fears prompted profit-taking. We’re starting to see some confidence returning, as reflected by a pullback in the Volatility Index last night of 1.34% to 16.53 points. The Index has been drifting lower after hitting a two-year high of 26.25 points last week.

Ahead of the Hong Kong open

Will we get any more developments that might prompt jitters to return?

A positive reading from China’s housing price index will go some way to allaying those worries. On the flipside, any signs of a property slump exacerbating will likely weigh on sentiment. Trades to watch out for include prices of industrial metals such as copper, AUD/USD, China A50, Hong Kong HS50 and mining stocks.

We are calling for the Hang Seng, or Hong Kong HS50, to open 0.13% lower at 23,328 points.

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